US to publish CPI report for annual Social Security cost-of-living adjustment

The U.S. Bureau of Labor Statistics will release September's Consumer Price Index (CPI) on October 24, specifically to enable the Social Security Administration to calculate the 2026 cost-of-living adjustment (COLA) and to inform the Federal Reserve's upcoming policy meeting where a 25 basis point interest rate cut is anticipated. This expedited release occurs despite a government shutdown that has suspended other economic data. However, the shutdown and existing resource constraints are raising significant concerns about the quality and potential volatility of CPI data for October, November, and December, which could impact the Fed's inflation assessments, though employment data quality is not expected to be affected.

Analysis

The U.S. Bureau of Labor Statistics (BLS) will release September's Consumer Price Index (CPI) on October 24, despite the ongoing government shutdown. This expedited release is crucial for the Social Security Administration to calculate the 2026 cost-of-living adjustment (COLA) for over 72.5 million beneficiaries, with projections indicating a 2.7% increase. The data will also inform the Federal Reserve's policy meeting on October 28-29, where a 25 basis point interest rate cut is widely anticipated, following a similar reduction last month.

While the September CPI is being released, the shutdown has suspended other economic data, raising significant concerns about the quality of future CPI reports. Economists, including Citigroup's Veronica Clark, warn that missing data for October (already one-third uncollected) could inject volatility and distort readings, potentially showing a higher average. This issue is compounded by existing BLS resource constraints from budget and staffing cuts.

The anticipated distortions in CPI data for October, November, and December will also impact the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge. Morgan Stanley's Michael Gapen notes "it will be a long wait for clean CPI data," with the December CPI not released until mid-January. Conversely, the quality of the employment report, specifically nonfarm payrolls, is not expected to be negatively affected by the shutdown.

Key Decisions for Investors

• Investors should anticipate increased volatility and potential distortions in upcoming CPI and PCE data for October through December due to incomplete data collection from the government shutdown.
• Closely watch the Federal Reserve's commentary and actions, as the anticipated 25 basis point rate cut might be influenced by or accompanied by statements addressing data quality concerns.
• Given potential data noise, investors should focus on longer-term inflation trends and other economic indicators, such as the unaffected employment data, rather than reacting solely to potentially skewed monthly CPI figures.