Inflation has been one of the biggest storylines in 2025 – and September’s report finally brought a bit of good news.
After months of uncertainty around energy prices, tariffs, and interest rate policy, the latest numbers from the Bureau of Labor Statistics showed inflation cooling slightly faster than expected.
That shift was enough to lift investor sentiment, push markets to record highs, and give the Federal Reserve some breathing room in its balancing act between fighting inflation and supporting growth.
For households and retirees, these trends may influence borrowing costs, savings yields, and even next year’s Social Security payments – all while shaping how the Fed approaches its next policy decisions.
At Momentum Wealth, we believe updates like these are about more than just data points. They’re signposts in the financial landscape – reminders to stay informed, focused, and grounded in your long-term plan.
Key Takeaways
- Inflation cooled in September, rising just 0.3% for the month and 3% year-over-year – slower than economists expected.
- Markets rallied, with major indices hitting new highs on signs that price pressures may be easing.
- The Federal Reserve cut rates by 0.25%, signaling patience before making further moves.
- Lower rates could mean cheaper borrowing, modestly lowering savings yields, and a potential tailwind for business growth.
- Retirees will see a 2.8% Social Security cost-of-living adjustment (COLA) starting in January 2026.
- Overall, inflation is moderating, not reversing, offering investors a steadier backdrop heading into year-end.
A Surprise In The Data
It felt like everything was aligned for a rough ride: inflation sticking around, tariffs ramping up, energy costs climbing. Economists were ready for the next inflation report to deliver bad news – and possibly derail hopes for a rate cut.
Then the latest numbers arrived… and the story shifted. According to the Bureau of Labor Statistics, consumer prices rose just 0.3% in September, bringing the annual rate to 3%. Core inflation (which strips out food and energy) eased slightly too. While gas and groceries ticked up, most other prices held steady – a hint that inflation might be losing some steam.
Why Markets Applauded
Wall Street responded positively. Major indices hit new highs, supported not only by the cooler-than-expected inflation numbers but also by better-than-expected corporate earnings. The takeaway: inflation isn’t cooling overnight – but it’s growing more slowly – which is exactly what the Federal Reserve has been striving for.
At its October 28-29 meeting, the Fed cut interest rates by 0.25%, but made it clear this doesn’t guarantee a December cut. They’re watching the data carefully. And this inflation report gives them a little more breathing room.
What It Means For Your Financial Journey
Here’s how this shift might touch your world:
- Borrowing costs: When interest rates come down, things like mortgages, auto loans, and credit card balances may become a bit more affordable.
- Business and economic growth: Lower borrowing costs can help companies invest, hire and expand – and that supports the overall economy.
- Savings and investment returns: While rate cuts can help, they also usually mean banks pay less for CDs and savings accounts.
- Global dynamics: A weaker U.S. dollar often follows rate cuts – which can help U.S. exports but may increase costs for international travel.
- Retirees: The same inflation data flows into the annual cost-of-living adjustment (COLA) for Social Security. The recent data supports a 2.8% COLA for 2026 – a meaningful bump for those relying on fixed income.
What We’re Keeping An Eye On
To be clear: inflation is not gone, and the economy isn’t cruising yet. These are data points, not game-changing events. But they do suggest we’re navigating the right direction.
At Momentum Wealth, we’re staying focused on the bigger picture: the long-term plan, not the short-term headlines. Moments like these – where the noise softens for a moment – are when staying disciplined and diversified matters most.
If you’re wondering how today’s economic environment could impact your portfolios, retirement timeline or borrowing options, we’re here to help. Let’s talk about it.