U.S. Inflation Rises 0.4% in October, Exceeding Market Expectations

Key Facts

The U.S. Consumer Price Index rose 0.4% month over month in October 2026, following a 0.6% increase in September, according to data from the U.S. Bureau of Labor Statistics. The reading was above the 0.3% forecast by economists polled by Reuters. The core index, which excludes food and energy, rose 0.3%, matching its pace in September and August. The monthly figures keep price pressures in focus despite the slowdown in headline inflation from the previous month. The bureau did not publish year-over-year changes for some indexes because it did not collect October 2025 data during the government funding lapse.

A breakdown of the index components showed that shelter remained one of the largest sources of the monthly increase: its index rose 0.3% and accounted for more than 30% of the increase in the all-items index. The food index rose 0.5% in October after remaining unchanged in September. Within that component, food at home rose 0.4%, while food away from home increased 0.5%. The comparison shows food price pressures rising again after holding steady the previous month. By contrast, the overall index did not move at the same pace across all its components, with some categories recording monthly declines.

The energy index rose 0.7% in October, after increasing 5.2% in September, signaling a clear slowdown in the pace of monthly gains. The gasoline index rose 1.0% after jumping 9.1% the previous month. Still, the Associated Press reported that gasoline prices were more than 37% higher than a year earlier, while electricity prices rose 0.9% from September to October. That year-over-year comparison applies to gasoline prices as reported by the agency and does not represent the annual inflation rate for the overall index, which the Bureau of Labor Statistics did not publish for series affected by the missing October 2025 data. Energy's slower monthly increase therefore coincided with some of its prices remaining elevated compared with a year earlier.

Among categories that declined, the index for used cars and trucks fell 1.2% in October, after rising 0.7% in September. The communications index also fell 0.1% during the month. These moves put the decline in used cars against continued increases in shelter, food and energy, while the core index remained at 0.3% for a third month. Economists polled by Reuters had expected the core index to rise 0.2% in October, Reuters reported via Investing.com. The core reading therefore exceeded expectations, although it did not accelerate from the previous two months.

The surprise reverberated across U.S. markets on Tuesday, November 10, as stocks fell and Treasury yields rose, while the dollar index climbed 0.3% to 102.05, according to Reuters. The two-year Treasury yield, which is most sensitive to interest-rate expectations, rose 13 basis points to 4.68%. The benchmark 10-year yield also climbed 7.6 basis points to 4.94%. The Associated Press reported that the S&P 500 lost 0.4%, the Dow Jones fell 0.3% and the Nasdaq Composite dropped 0.7%. The moves came in the session when the inflation report was released, as investors reassessed the monetary policy outlook.

Before the data release, Federal Reserve Governor Christopher Waller said he leaned toward supporting a 25-basis-point increase at the December meeting, but saw a 50-basis-point increase as something that should be on the table if core inflation in October came in around 0.3% or higher. Waller said, "If the October CPI inflation data are similar to the previous two monthly readings, with core inflation around 0.3% or higher, a stronger policy move may be needed." He added that a 50-basis-point increase "should be on the table" at the December meeting in that case. The remarks take on added significance because the published core reading matched the threshold he cited, but they remain a position he stated before the data were released. The November Consumer Price Index report is scheduled for release on December 10, 2026, at 8:30 a.m. Eastern Time.