Consumer prices climbed more than economists anticipated in October, providing little relief for Americans still facing elevated living costs.
The Consumer Price Index, a measure of price changes over time, increased 0.4% from the previous month, the Labor Department reported Tuesday.
The agency did not provide a year-over-year inflation figure for October 2026 because the 2025 government shutdown prevented the collection of October 2025 consumer price data needed for comparison.
By the numbers
October’s monthly inflation gain eased from September, when headline prices rose 0.6%.
Even so, the latest increase exceeded expectations. Economists surveyed by FactSet had forecast a 0.3% month-over-month rise in October.
The October report offers one of the first views of the economy since the midterm elections, which highlighted widespread voter frustration over persistent price increases.
“Today’s CPI report suggests underlying inflation remains more persistent than the Fed would like,” Andrew Davis, head of investment strategy at Bryn Mawr Trust, said in an email. “While headline inflation moderated from September, core prices rose 0.3% for the third consecutive month, indicating that underlying price pressures have yet to meaningfully ease.”
Although inflation in recent months has been driven largely by rising energy costs, October’s figures show that prices for other goods and services are also moving higher. Shelter costs increased 0.3% during the month and accounted for more than 30% of the overall monthly gain, according to the Labor Department.
Food prices also picked up, rising 0.5% in October after remaining unchanged in September, the data showed.
Energy prices
Energy costs, which have surged because of the Iran war, played a smaller role in October’s monthly inflation increase than they did in September. Energy prices rose 0.7% last month, compared with a 5.2% jump in September.
Gasoline prices have declined for several weeks as stations transition to less expensive winter fuel blends and consumers reduce summer travel.
Global oil prices, a key influence on pump prices, have also fallen amid hopes that the midterm elections could help pave the way for a U.S.-Iran agreement to end the war.
AAA said the national average gasoline price fell below $4 a gallon Tuesday for the first time in nearly four months.
Core inflation, which excludes volatile food and energy categories, rose 0.3% in October. That matched September’s increase but came in slightly above economists’ projections.
Josh Hirt, senior U.S. economist at Vanguard, said in an email that elevated energy costs have created a “longer-lasting shock pass-through” into core inflation. As a result, the investment firm raised its year-end 2026 core inflation forecast to 3.2%.
What this means for interest rates
Wall Street analysts said October’s stronger-than-expected inflation could prompt the Federal Reserve to raise interest rates at its December meeting.
“This is the last look at CPI inflation the Fed will get before its December meeting, and it most likely seals the deal on a rate hike to close the year,” James McCann, senior economist for investment strategy at Edward Jones, said in an email. He said the larger issue is whether the central bank will increase its benchmark rate by a quarter or half a percentage point.
Following the inflation report, CME Group’s FedWatch tool put the odds of a 0.25-percentage-point December rate increase at 85%, compared with a 15% probability of a 0.50-percentage-point hike.
The central bank remained on the sidelines at its October meeting, though two Federal Open Market Committee members voted to raise rates.
Speaking at a conference in London on Tuesday, Christopher Waller, a member of the Fed’s Board of Governors, said policymakers should consider a 0.50-percentage-point increase at the central bank’s Dec. 8-9 meeting.
“Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take,” he said.
