US Inflation Rises 0.4% in October, Pushing Dollar Higher

Key Facts

The US Consumer Price Index rose 0.4% month over month in October 2026, exceeding the 0.3% forecast in a Reuters poll, after climbing 0.6% in September, according to the US Bureau of Labor Statistics. After the report was released, the dollar strengthened against major currencies, with its index rising 0.51% to 102.20, according to Reuters. The core reading, which excludes food and energy, rose 0.3% during the month, the same rate recorded in September and August. But core inflation was above economists’ 0.2% forecast, according to Reuters. The upside surprise led investors to reassess the path of interest rates, as price pressures persisted across several components of the index.

The inflation data followed Federal Reserve Board member Christopher Waller’s case for further rate increases, according to a Reuters report. The report quoted Standard Chartered’s Steve Englander as saying Waller’s comments marked the start of a rise in the dollar and yields, adding: "That was the beginning of the rise in the dollar and yields." After the data were published, interest-rate-linked contracts showed a probability of about 85% of a 25-basis-point increase in December and a 15% probability of a 50-basis-point increase, according to Reuters. Rate expectations had already shifted after Waller’s remarks before the figures were released, while the higher-than-expected reading added fresh impetus to hawkish pricing. These probabilities reflect market bets on the next meeting’s decision and do not represent an announced Fed decision.

In currencies, the euro fell 0.48% to $1.117, while the dollar rose 0.47% to 158.66 yen, according to figures reported by Reuters on November 10. The pound fell 0.3% to $1.3395, after rising about 0.7% in the previous session, according to a Reuters report. The report linked the pound’s performance to Waller’s comments and US data that supported the US currency. In the bond market, the two-year US Treasury yield jumped 19.07 basis points to 4.738%. The yield typically moves in line with rate expectations, making its rise another indicator that investors’ bets had shifted after the report.

The reaction extended to other assets: Nasdaq futures fell 1.4% and those tied to the S&P 500 fell 0.8%, according to Reuters. Gold also fell 2% to $4,057 an ounce as the dollar rose and expectations of tighter monetary policy increased. Among price components, the food index rose 0.5% in October, while the energy index climbed 0.7% after a 5.2% increase in September. The shelter index rose 0.3%, accounting for more than 30% of the monthly increase in the overall index. This highlights the continued impact of housing costs, alongside food and energy, on the monthly inflation reading.

Within the energy component, the gasoline index rose 1.0% in October, following a 9.1% increase in the previous month, while the electricity index rose 0.9%. By contrast, the natural gas index fell 0.8% in October. For the annual comparison, the Bureau of Labor Statistics did not publish the annual rate of change for October 2026 in series lacking October 2025 data. The bureau said it did not collect survey data for that month because of a lapse in government funding. As a result, the monthly comparison remained the focus of the published reading, while those series lacked the October 2025 baseline needed to calculate the annual change.

The Consumer Price Index reading follows September data for the personal consumption expenditures price index, the inflation measure tracked by the Fed, which showed a monthly increase of 0.5% and an annual increase of 3.7%. The core personal consumption expenditures price index rose 0.3% in September and 3.1% over the 12 months ending that month, according to Fed data cited by Waller. Those figures provide additional context on the inflation path ahead of the October reading, while the latest Consumer Price Index data showed an overall monthly increase that exceeded expectations. The Fed will hold its next meeting on December 8 and 9, 2026. The November Consumer Price Index report is scheduled for release on December 10 at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics’ calendar.