Everyone is waiting for Friday’s big inflation report. Here’s what to expect

The release of September’s consumer price index (CPI) report is highly anticipated by Wall Street this month, as it is one of the few official economic reports available due to the government shutdown. The lack of data in recent months has heightened the importance of this report, making it a potentially market-moving event.

Economists are expecting the CPI numbers to be consistent with previous months, with a projected 0.4% increase in the all-items reading and a 3.1% annual inflation rate. The core CPI, excluding food and energy, is also expected to show a 0.3% monthly increase and a 3.1% annual level. The focus will be on any deviations from these expectations, as well as the impact of President Donald Trump’s tariffs on prices.

Goldman Sachs economists predict little change in auto prices, a boost in car insurance, and a decline in airfare. They also anticipate upward pressure on categories such as communication, household furnishings, and recreation due to tariffs, adding 0.07 percentage point to the core inflation figure.

However, the reliability of the CPI data is questioned due to the government shutdown and the lack of important data points. Investors are on edge, with geopolitical uncertainty and concerns about higher prices potentially slowing economic growth. The CPI report will provide some clarity on these issues, both for the markets and the Federal Reserve, which is expected to approve another interest rate cut at its upcoming policy meeting.

Despite the uncertainty, markets have been buoyed by a strong earnings season and resilient economic data prior to the shutdown. The economy has been showing strength, with GDP tracking close to 4% for the third quarter. A surprise in the CPI report could shake up this narrative and lead to market volatility.

Overall, a higher-than-expected CPI number could present a buying opportunity for investors, as the economy remains strong, the Fed is cutting interest rates, earnings per share are growing, and the fourth quarter is traditionally the strongest quarter of the year. The outcome of the CPI report will be closely watched by investors and policymakers alike.