What To Expect From Friday’s Inflation Report

The Fed’s preferred measure of inflation likely kept sizzling in September.

A report scheduled for release on Friday is expected to show that inflation, as measured by the Personal Consumption Expenditures index, rose 2.8% over the 12 months ending in September, up from 2.7% in August according to estimates by RBC Bank among others. That would be the highest since April 2024. “Core” inflation, which excludes volatile prices for food and energy, likely rose 2.9% over the year, the same as in August.

If the report matches expectations, it would mark 55 months since core PCE inflation—the price measure preferred by officials at the Federal Reserve—was higher than the Fed’s target of a 2% annual rate.

Inflation surged during the pandemic, peaking in 2022 and subsequently falling toward the Fed’s target. But President Donald Trump’s tariffs have pushed up prices again this year, as merchants pass the cost of the import taxes on to consumers.

Friday’s report was initially scheduled for October, but was delayed by the government shutdown. If it matches expectations, PCE inflation would have the same annual increase as the more widely-watched Consumer Price Index for September. The two price measures often move in the same direction, although they often show slightly different inflation rates.

Forecasters expect inflation to remain above target for months, if not years, to come. Economists at Bank of America, for example, expect core PCE inflation to stay over 3% through the third quarter of 2026 and over 2% through 2027, according to a commentary published Wednesday.

Stubborn inflation, however, may not deter the Fed from cutting its benchmark interest rate at its meeting next week. Although the Fed officials have kept rates high to discourage borrowing and quell inflation, they also face pressure to cut rates to encourage hiring and help out the increasingly shaky job market. The Fed cut its benchmark interest rate by a quarter-point at each of its last two meetings and is widely expected to do so again.

Fed officials have said they see risks on both halves of its dual mandate from Congress to keep inflation low and employment high, and the two goals are pulling interest rates in opposite directions. A recent slowdown in job growth has given the rate-cutters the upper hand in the debate.