Consumer prices increased 3% in September from a year earlier, the Labor Department said Friday, the highest since January and up from 2.9% in August. Excluding the volatile food and energy categories core prices also rose 3%, down from 3.1% in the previous month.

On a monthly basis, price increases slowed: They rose 0.3% in September, down from 0.4% the previous month. Core inflation also cooled to 0.2%, from 0.3% in August.

The figures show that inflation continues to rise more slowly than many economists expected when President Donald Trump imposed sweeping tariffs in April. Some of those duties were later reduced as part of trade deals, while many companies have only passed on part of the tariff cost to consumers out of concern that doing so would reduce sales. Businesses may shift more costs to consumers in the coming months if the duties appear permanent.

Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, said in a statement to Fortune that “much like a Sherlock Holmes’ story, inflation is the dog that didn’t bark.” So many people have been expecting a sharp rise in consumer prices and been position bearishly, he said, but the latest cool reading shows that “the economy – and corporate America – is more resilient than many expected.” Acknowledging that valuations are high and the market has risks, Zaccarelli said it’s still “hard to see an interruption of this year’s bull market.”

Similarly, Eric Teal, Chief Investment Officer for Comerica Wealth Management, concluded that “Inflation is staying contained at this point” and the impact from tariffs has been felt mostly felt in “lower end consumption imports.” Teal said he thinks tariff effects will probably increase the longer they stay in place. “Companies did the easy tasks first but remain resistant to passing the tariffs through to inflation-phobic consumers which will probably fade.” The “pass-through” rate, of companies essentially adding the tariff price into sales as a quasi-sales tax, should nearly 75%, according to Teal, higher than the 50% observed thus far. 

The smaller increase will come as a bit of relief to Federal Reserve officials, who have signaled that they will cut their key interest rate at their meeting next week for the second time this year. Yet inflation remains above the Fed’s 2% target, underscoring the high stakes of the Fed’s moves.

“Put simply, while inflation doesn’t appear to be accelerating, neither is it moving back toward target,” said Eric Winograd, chief U.S. economist at asset manager AllianceBernstein. “That will keep the Fed cautious rather than aggressive.”

The report on the consumer price index was 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 that increase was set at 2.8% for 2026, equal to about $56 per month.

Gas prices jumped 4.1% just in September from the previous month, a major driver of inflation last month. Grocery prices rose 0.3%, less than in August, and are 2.7% higher than a year ago.

Trump’s duties are pushing up the prices of many goods: Furniture costs jumped 0.9% last month and are 3.8% more expensive than a year ago. Appliance costs rose 0.8% just in September, though they are up only 1.3% from a year earlier. Clothing prices increased 0.7% last month and shoes 0.9%, though neither have risen that much from last year.

Jeffrey Roach, Chief Economist for LPL Financial, said in a statement to Fortune that tariffs were likely the culprit for rising apparel prices in September, citing the Fed’s Beige Book survey which showed that some firms facing tariff-induced cost pressures kept their selling prices largely unchanged to preserve market share and in response to pushback from price-sensitive clients. He also cited lower immigration as a factor behind the lower cost of housing as “inflation for some big ticket items has cooled, most notably in used vehicles and owners’ equivalent rent.”

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. Beef costs rose 1.2% in September and are up 14.7% from a year earlier, Friday’s report showed.

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.

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.