Delayed Inflation Report Out Friday    10/24 06:01

   Friday's inflation report is likely to show that consumer prices worsened in 
September for the second straight month as President Donald Trump's tariffs 
have lifted the cost of some groceries and other goods.

   WASHINGTON (AP) -- Friday's inflation report is likely to show that consumer 
prices worsened in September for the second straight month as President Donald 
Trump's tariffs have lifted the cost of some groceries and other goods.

   The report on the consumer price index is being issued more than a week late 
because of the government shutdown, now in its fourth week. The Trump 
administration recalled some Labor Department employees to produce the figures 
because they are used to set the annual cost-of-living adjustment for roughly 
70 million Social Security recipients.

   Friday's inflation report will be the first comprehensive economic data to 
be released in more than three weeks and will attract intense interest from 
Wall Street and officials at the Federal Reserve. Fed officials are cutting 
their short-term interest rate to buoy the economy and hiring, but they are 
taking some risk doing so because inflation is still above their 2% target.

   The issues of affordability and the cost of necessities are gaining in 
political importance. Concerns over the costs of rent and groceries have played 
a key role in the mayoral race in New York City. And Trump, who has 
acknowledged that the spike in grocery prices under President Joe Biden helped 
him win the 2024 election, has been considering importing Argentine beef to 
reduce record-high U.S. beef prices, angering U.S. cattle ranchers.

   The cost of ground beef has jumped to $6.32 a pound, a record, in part 
because of tariffs on imports from countries such as Brazil, which faces a 50% 
duty. Years of drought that have reduced cattle herds have also raised prices.

   Friday's report is forecast to show that inflation rose 3.1% in September 
from a year earlier, according to a survey of economists by data provider 
FactSet. That would be up from 2.9% in August and the highest in 18 months. On 
a monthly basis, inflation is projected to be 0.4% in September, the same as in 
August.

   Excluding the volatile food and energy categories, core inflation in 
September was likely 3.1% for the third straight month. On a monthly basis, 
core prices likely rose 0.3%, economists project, also for the third straight 
month.

   Such figures are unlikely to deter the Fed from cutting its key rate by 
another quarter-point when it meets next week, to about 3.9%. It would be the 
second cut this year and is driven by Fed Chair Jerome Powell's concerns that 
hiring is weakening and poses a threat to the economy.

   Even as inflation has fallen sharply from its peak of 9.1% more than three 
years ago, it remains a major concern for consumers. About half of all 
Americans say the cost of groceries is a "major" source of stress, according to 
an August poll by The Associated Press-NORC Center for Public Affairs Research.

   And the Conference Board, a business research group, finds that consumers 
are still referencing prices and inflation in responses to its monthly survey 
on consumer confidence.

   Still, inflation has not risen as much as many economists feared when Trump 
first announced a sweeping set of tariffs. Many importers built up inventories 
of goods before the duties took effect, while Trump reduced many import taxes, 
including as part of trade deals with China, the United Kingdom, and Vietnam.

   And many economists, as well as some Fed officials, expect that the tariffs 
will create a one-time lift to prices that will fade by early next year. At the 
same time, inflation excluding the tariffs is cooling, they argue: Rental price 
increases, for example, are declining on average nationwide.

   Yet Trump is imposing tariffs in an ongoing fashion that could raise prices 
in a more sustained fashion.

   For example, the Trump administration is investigating whether to slap 100% 
tariffs on imports from Nicaragua over alleged human rights violations. The 
prospect of such steep duties is a major headache for Dan Rattigan, the 
co-founder of premium chocolate maker French Broad, based in Asheville, N.C.

   "We've been shouldering some significant additional costs," Rattigan said. 
The United States barely produces any cocoa, so his company imports it from 
Nicaragua, the Dominican Republic, and Uganda. The imports from Nicaragua were 
duty-free because the country had a trade agreement with the United States, but 
now faces an 18% import tax.

   Cocoa prices have more than doubled over the past two years because of poor 
weather and blights in West Africa, which produces more than 70% of the world's 
cocoa. The tariffs are an additional hit on top of that. Rattigan is also 
paying more for almonds, hazelnuts, and chocolate-making equipment from Italy, 
which has also been hit with tariffs.

   French Broad raised its prices slightly earlier this year and doesn't have 
any plans to do so again. But after the winter holidays, "all bets are off ... 
in what is a very unpredictable business climate," Rattigan said.