September's Consumer Price Index (CPI) is expected to show inflation holding stubbornly around 3%, underscoring how tariffs and service-sector stickiness continue to complicate the Federal Reserve's path toward its 2% target.

The report, set for release on Friday at 8:30 a.m. ET, was delayed by the ongoing government shutdown. It marks the first major piece of federal economic data since the shutdown began — now the second-longest in US history with no end in sight.

Economists surveyed by Bloomberg expect headline CPI to rise 0.4% month over month, matching August's pace, and 3.1% year over year — the highest since May and above the 12-month average of 2.7%.

"Core" CPI, which strips out volatile food and energy prices, is expected to climb 0.3% on the month and 3.1% on the year, unchanged from August.

In a preview note published Monday, Bank of America economist Steven Juneau said tariffs remain a "source of goods price inflation" and will continue to do so "over the next few quarters," even as used car prices reverse some of the sharp swings that added noise to inflation data earlier this summer.

Juneau added that non-housing services inflation should moderate only slightly, cautioning that the category will remain "too firm for comfort" as core services, such as medical care and transportation, remain sticky.

BNP Paribas called the September CPI a "key checkpoint to review our baseline," noting that "risks for the September CPI release tilt to the downside," as softer shelter costs and only modest tariff pass-through in goods are likely to offset seasonal strength in other service categories. The firm added that core CPI readings "tend to be a touch weaker than consensus expectations in September."

Still, BNP expects more tariff impact ahead, anticipating "more material pass-through taking place in September and extending into Q1 2026."

The bank noted that "companies have taken a relatively restrained approach to passing on tariffs, with consumers bearing just under 20% of costs," but expects firms will "step up tariff pass-through in Q3 and Q4 2025, shifting the bulk of these costs to consumers by the end of Q1 2026."

Read more: 5 ways to tariff-proof your finances

That focus on tariff timing echoes across Wall Street, with Goldman Sachs also flagging the tug-of-war between softening goods prices and lingering tariff effects.

Goldman's economics team, led by Jan Hatzius, expects a fading boost in September from airfares and continued softness in used cars to offset rising food and energy costs. Still, Goldman said tariffs will "continue to boost monthly inflation" through early next year, even as "underlying trend inflation falls further, reflecting shrinking contributions from the housing and labor markets."

Beyond Friday’s data, Seema Shah, chief global strategist at Principal Asset Management, said overall inflation risks remain skewed toward higher prices.

"The inflation passthrough has so far been more muted than anticipated, likely due to a combination of margin compression, inventory front-loading, and trade diversion," she said. "While these factors have helped cushion the initial impact, they are inherently temporary."

She added that "as inventories deplete, trade routes narrow, and margins continue to shrink, firms may be forced to pass on higher costs to consumers. As such, upside risks remain."

Altogether, Friday's report is unlikely to change expectations for another Fed rate cut later this month. Markets expect with near 100% certainty that the Fed will deliver a quarter-point cut at next week's policy meeting, according to the CME FedWatch tool .

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal , LinkedIn , and email her at alexandra.canal@yahoofinance.com.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

September's Consumer Price Index (CPI) is expected to show inflation holding stubbornly around 3%, underscoring how tariffs and service-sector stickiness continue to complicate the Federal Reserve's path toward its 2% target.

The report, set for release on Friday at 8:30 a.m. ET, was delayed by the ongoing government shutdown. It marks the first major piece of federal economic data since the shutdown began — now the second-longest in US history with no end in sight.

Economists surveyed by Bloomberg expect headline CPI to rise 0.4% month over month, matching August's pace, and 3.1% year over year — the highest since May and above the 12-month average of 2.7%.

"Core" CPI, which strips out volatile food and energy prices, is expected to climb 0.3% on the month and 3.1% on the year, unchanged from August.

In a preview note published Monday, Bank of America economist Steven Juneau said tariffs remain a "source of goods price inflation" and will continue to do so "over the next few quarters," even as used car prices reverse some of the sharp swings that added noise to inflation data earlier this summer.

Juneau added that non-housing services inflation should moderate only slightly, cautioning that the category will remain "too firm for comfort" as core services, such as medical care and transportation, remain sticky.

BNP Paribas called the September CPI a "key checkpoint to review our baseline," noting that "risks for the September CPI release tilt to the downside," as softer shelter costs and only modest tariff pass-through in goods are likely to offset seasonal strength in other service categories. The firm added that core CPI readings "tend to be a touch weaker than consensus expectations in September."

Still, BNP expects more tariff impact ahead, anticipating "more material pass-through taking place in September and extending into Q1 2026."

The bank noted that "companies have taken a relatively restrained approach to passing on tariffs, with consumers bearing just under 20% of costs," but expects firms will "step up tariff pass-through in Q3 and Q4 2025, shifting the bulk of these costs to consumers by the end of Q1 2026."

Read more: 5 ways to tariff-proof your finances

That focus on tariff timing echoes across Wall Street, with Goldman Sachs also flagging the tug-of-war between softening goods prices and lingering tariff effects.

Goldman's economics team, led by Jan Hatzius, expects a fading boost in September from airfares and continued softness in used cars to offset rising food and energy costs. Still, Goldman said tariffs will "continue to boost monthly inflation" through early next year, even as "underlying trend inflation falls further, reflecting shrinking contributions from the housing and labor markets."

Beyond Friday’s data, Seema Shah, chief global strategist at Principal Asset Management, said overall inflation risks remain skewed toward higher prices.

"The inflation passthrough has so far been more muted than anticipated, likely due to a combination of margin compression, inventory front-loading, and trade diversion," she said. "While these factors have helped cushion the initial impact, they are inherently temporary."

She added that "as inventories deplete, trade routes narrow, and margins continue to shrink, firms may be forced to pass on higher costs to consumers. As such, upside risks remain."

Altogether, Friday's report is unlikely to change expectations for another Fed rate cut later this month. Markets expect with near 100% certainty that the Fed will deliver a quarter-point cut at next week's policy meeting, according to the CME FedWatch tool .

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal , LinkedIn , and email her at alexandra.canal@yahoofinance.com.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Beyond Friday’s data, Seema Shah, chief global strategist at Principal Asset Management, said overall inflation risks remain skewed toward higher prices.

"The inflation passthrough has so far been more muted than anticipated, likely due to a combination of margin compression, inventory front-loading, and trade diversion," she said. "While these factors have helped cushion the initial impact, they are inherently temporary."

She added that "as inventories deplete, trade routes narrow, and margins continue to shrink, firms may be forced to pass on higher costs to consumers. As such, upside risks remain."

Altogether, Friday's report is unlikely to change expectations for another Fed rate cut later this month. Markets expect with near 100% certainty that the Fed will deliver a quarter-point cut at next week's policy meeting, according to the CME FedWatch tool .

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal , LinkedIn , and email her at alexandra.canal@yahoofinance.com.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance