11 September 2025
If you are covering the latest US inflation data, please find below a comment from Lindsay James, investment strategist at Quilter:
“After a surprising data print yesterday showing producer prices fell, today’s inflation data highlights that tariff related pressures are failing to show up as many were expecting. Core consumer price inflation has come in at the same level as last month, 3.1%, while the headline inflation rate has risen to 2.9%, although this has been driven by slightly higher energy prices. Both are in line with what the market had been expecting, so far fewer shocks than yesterday’s producer prices data.
“This is not to say that the tariff inflation threat is over or has been exaggerated. It remains hard to discern that tariffs are having a broad impact on the level of prices and how much of it is other economic forces playing out at the same time. What is clear is that corporates are still having to digest the multiple and ongoing changes to tariffs and as such some of that will be absorbed by the companies themselves, while some may pass on price rises when the time is right and the environment is more predictable. For now, it’s too soon to say that tariffs haven’t been inflationary or that any inflationary effect is a onetime change.
“The other factor playing out here is the recent slowdown in payrolls and the labour market. This has the potential to dampen any inflationary effects as lower demand for workers typically precedes slower wage growth, which itself has been a contributor to corporate costs and increases in CPI in recent years.
“What the data today shows is that a rate cut looks near certain next week, and should inflation remain in check, markets will be clamouring for more despite it remaining well above the 2% target. There remains an expectation that there will be a significant rate cutting cycle in 2026, which would usually indicate something is very wrong in the economy, especially with no recession seemingly imminent. This remains, however, a very unpredictable market even with a less volatile inflation print.”
