Photographer: David Paul Morris/Bloomberg.
Private-sector measures suggest that U.S. inflation picked up in September, offering more evidence of tariffs boosting certain prices in the absence of official government metrics.
Prices for goods like household equipment and furniture rose firmly, pushing up annual inflation to the highest level in two years, according to PriceStats data that’s based on products sold by online retailers. Another metric, from OpenBrand, showed the strongest monthly price growth since June, driven by personal-care products and communications devices.
Although some goods’ prices showed a notable increase in the September data—particularly imported merchandise—economists expect inflation to start abating somewhat next year. Services costs will be key to realizing this expectation. Unlike the private-sector reports, these are more fully represented in consumer price index (CPI) data that have been delayed because of the government shutdown.
The trend can be described like an airplane that’s beginning to land, and tariffs are creating some “turbulence,” said Ralph McLaughlin, chief economist at OpenBrand. He noted that the end of the de minimis sales tax exemption—which had allowed imported packages worth no more than $800 to avoid duties—in August may have boosted inflation last month. “Tariffs act like little air pockets that cause the plane to go up, but otherwise the plane is on a downward trajectory,” McLaughlin said. “And that analogy is our perspective on what we think the impact of tariffs will be on prices.”
That’s similar to the view of several officials at the Federal Reserve, which is expected to lower interest rates further at its meeting on October 28 and 29.
| . “Our own tracking of millions of prices over the past few months suggests the September CPI will likely be modest enough to make the FOMC [Federal Open Market Committee] comfortable about cutting rates in October.” — Anna Wong & Alex Tanzi |
Unlike the job market, alternative metrics on inflation are few and far between, as Fed Chair Jerome Powell noted at a conference Tuesday. That has to do with the labor-intensive nature of gathering price quotes—the Bureau of Labor Statistics (BLS) typically sends out hundreds of data collectors across the country each month to amass prices on some 80,000 goods and services. That work entails visits to a variety of businesses, from grocery stores to doctors’ offices.
It’s a similarly challenging task for the private sector, and the process goes well beyond data collection, said Alberto Cavallo, whose Billion Prices Project laid the foundation for PriceStats. “You have to make sure you classify the data correctly. You have to then know what to include, what to exclude, you have to decide what to do when you have missing data, how to do some adjustments for seasonality and other patterns,” Cavallo said. “So it is not trivial.”
That process, along with most of the BLS’s operations, ceases in a government shutdown. However, the agency was directed to bring back some staff to assemble the September CPI so that the Social Security Administration can produce its annual cost-of-living adjustment. The report is now due on October 24. Until then, investors can turn to private-sector data for an early look. Yet these measures generally exclude prices of services like dining out and travel. OpenBrand’s report covers only durable and personal goods, split into categories such as appliances and cosmetics.
PriceStats similarly has a bias toward goods and doesn’t track shelter inflation. Several platforms like Zillow Group Inc. and Realtor.com have their own measures of home prices—which dipped slightly in September—but BLS calculates housing costs with a unique formula, and its broader CPI shelter category also includes hotel stays.
Other reports hint at certain aspects of inflation, but do not reveal the extent of price increases. An Institute for Supply Management measure of services prices climbed last month to one of the highest levels in nearly three years. A September survey of small businesses found a net 31 percent of owners planned to raise prices in the next three months, one of the largest shares since early 2024.
“We’re beginning to get a little bit more concerned about the trend,” said Michael Metcalfe, head of macro strategy at State Street Markets, which analyzes and distributes the PriceStats data. “We’re currently getting into a period where prices are supposed to be really quite soft, and the PriceStats data is not currently showing that normal softening.”
It’s unclear what kinds of deals retailers can offer consumers this holiday shopping season. President Donald Trump’s latest levies on lumber and wood products just took effect on Tuesday, but the September 29 announcement already set off higher prices for both domestic and imported goods, according to a tariff tracker from Harvard Business School’s Pricing Lab, which Cavallo leads.
While there have been quick reactions to incremental trade developments, the broader trend shows a steadier impact to consumer prices, Cavallo said. “I think a lot of people expected one big change, [which would drive] inflation a lot. That’s not how it has happened,” he said. “It’s more like a gradual pass-through that is slowly putting upward pressure on prices.”
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