US Inflation Rises 0.4% in October as Energy Gains Slow and Core Inflation Holds Firm
Key Facts
The US Consumer Price Index for All Urban Consumers rose 0.4% month over month in October, according to a Bureau of Labor Statistics statement issued on November 10. The increase followed a 0.6% rise in September, showing a slower pace during the month. On the same day, Federal Reserve Governor Christopher Waller said he would continue to support a 25-basis-point increase at the December meeting if the data came in as he expected. Waller tied his position to the core inflation reading, saying an October reading of 0.3% or higher could warrant considering a stronger move. His remarks put October's data at the center of the debate over the Fed's next step ahead of its next meeting in December.
The index's components were mixed in October, with the energy index rising 0.7% after a 5.2% increase in September. The gasoline index rose 1.0% during the month, compared with a 9.1% increase in the previous month. The food index rose 0.5%, with food at home up 0.4% and food away from home up 0.5%. The core Consumer Price Index, which excludes food and energy, posted a monthly increase of 0.3%. The monthly core increase was at the same rate in September and August, according to the Bureau of Labor Statistics.
Waller said the personal consumption expenditures price index, the inflation measure targeted by the Fed, rose 0.5% in September and 3.7% over the previous twelve months. He added that the core PCE price index increased 0.3% monthly and 3.1% year over year over the same period. Speaking before the October reading was released, he said that sustained core inflation of around 0.3% or higher could mean that "a stronger policy move may be called for." He added: "In that case, I think a 50-basis-point increase should be considered at the December meeting." He had also said he would support a 25-basis-point increase at the meeting if his expectations came to pass.
The October reading came as the US economy grew at an annual rate of 3.4% in the third quarter, spanning July to September, according to estimates reported by the Associated Press. The agency attributed the growth mainly to consumer spending. The annual inflation rate was not reported in the October report because a government funding lapse in the previous year prevented the collection of October 2025 data, according to the agency. The Bureau of Labor Statistics said the absence of those data prevented it from publishing the 12-month change for indexes lacking comparison data. In other price components, electricity rose 0.9% monthly in October, its largest increase since April, while gasoline prices rose more than 37% year over year.
US stocks fell in morning trading after the inflation data were released on November 10, according to the Associated Press. The S&P 500 fell 0.7%, while the Nasdaq declined 0.8%. The Dow Jones dropped 333 points, or 0.6%, as of 10:45 a.m. Eastern Time. The yield on the 10-year US Treasury rose to 4.99% from 4.88% at the previous session's close, as traders increased their bets on a rate hike. Most economists had expected a quarter-point increase at the Fed's December 8 and 9 meeting, while the probability investors assigned to an increase approached 85%.
The Federal Reserve calendar lists the Federal Open Market Committee meeting in January 2027 for January 26 and 27. Future meeting dates remain tentative until confirmed by the bank at the preceding meeting, according to the official schedule. The January meeting follows the December meeting, which was the focus of Waller's remarks and economists' and investors' rate-increase expectations. In October, a story published by EL7 reported that the Fed kept its interest rate in a range of 3.75% to 4%. The next rate decision remains subject to what the committee decides at its meeting.