US consumer prices rose faster than expected in October, leaving the Federal Reserve on course to raise interest rates again next month despite a cooling in the headline pace of inflation.
The Consumer Price Index rose 0.4% last month, after a 0.6% increase in September, the Labor Department’s Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast a 0.3% rise.
Underlying inflation proved stickier still. Excluding food and energy, core prices climbed 0.3% in October — the third month in a row at that pace — against a forecast of 0.2%. Shelter costs rose 0.3% and accounted for more than 30% of the month’s increase, while food prices rose 0.5% and energy prices 0.7%.
The report arrived with an unusual gap. The bureau published no annual inflation rate, because last year’s federal government shutdown prevented it from collecting consumer price data in October 2025, leaving no base for comparison. Annual inflation was 3.7% in September, well above the Fed’s 2% target, and the bureau’s preferred PCE measure is also running above 3%.
The figures land at a sensitive moment for the Fed. Governor Christopher Waller said earlier on Tuesday that he would back a quarter-point rise at the central bank’s December 8–9 meeting even if inflation had cooled, and that a half-point move should be considered if core prices rose 0.3% or more — exactly the figure reported. Financial markets had fully priced in a 25 basis point increase before the release, with the Fed’s benchmark rate at 3.75%–4.00%.
High inflation has become a political liability as well as an economic one. It contributed to the heavy losses suffered by President Donald Trump’s Republican Party in last week’s midterm elections, and the cost of living remains voters’ top concern. Oil prices, lifted by the US–Israeli war with Iran, and import tariffs imposed by the Trump administration last year are both adding to household costs.
For now, economists said only a sharp sell-off in equities or a widening in credit spreads would be likely to stop the Fed from tightening in December. Stocks rallied on Monday as oil prices fell, but the October data suggest the path back to 2% inflation will be slower than markets had hoped.
Sources: Reuters (https://www.reuters.com/world/us/us-consumer-prices-rise-above-expectations-october-2026-11-10/) and the US Bureau of Labor Statistics.
