Consumer price growth continues to pick up: In September, consumer prices increased 0.3% over the month and 3.0% over the year, up from the 2.9% annual rise in August but lower than the 3.1% advance anticipated. Core CPI, which excludes more volatile energy and food prices, rose 0.2% over the month and 3.0% over the year, slightly lower than the 3.1% 12-month increase in the month prior.
What it means: Although signs of tariffs in consumer prices are evident, they are not particularly more apparent in September than in prior months. Nonetheless, durable goods prices are up 1.8% over the year, the biggest over-the-year increase since November 2022, but this increase is likely not enough to deter Federal Reserve officials from cutting their interest rate target this week, particularly since inflation rose by less than anticipated in September.
Kansas City manufacturing activity improved further in October: Manufacturing activity increased in the Tenth District in October, with the month-over-month composite index rising 2 points to 6 from September. Meanwhile, expectations for future activity jumped 7 points to 14. New order growth slowed, while production jumped. Both the pace of growth for prices received and paid grew month-over-month, with raw material prices ticking up from 40 to 41 and prices received increasing 6 points to 19.
Why it matters: After activity rose in September, Kansas City manufacturing activity is starting to show some consistent growth for the first time since September 2022. High prices remain a challenge, though, and a majority of firms reported a decrease in profit margins this year. On the other hand, the largest share of firms (40%) predicts an increase in profit margins in 2026, amid an expectation for increased activity.
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