U.S. Inflation Rises 0.4% in October as Core Pace Accelerates to 3.7%
Key Facts
The seasonally adjusted U.S. Consumer Price Index rose 0.4% in October, after a 0.6% increase in September, exceeding the 0.3% average forecast of economists polled by Reuters. The U.S. Bureau of Labor Statistics said the monthly increase came at a time when the usual year-over-year comparison data were unavailable. The core reading, which excludes food and energy, was 0.3% for a third consecutive month, according to Axios. Persistent underlying pressures kept the monetary policy outlook in focus ahead of the Federal Reserve’s December meeting. By midmorning, market bets on a 50-basis-point rate increase at that meeting had approached 15%, Reuters reported.
The Bureau of Labor Statistics did not publish annual rates of change for the October indexes after October 2025 data could not be collected because of the government funding lapse. The bureau said, "The Bureau of Labor Statistics did not collect survey data for October 2025 because of the lapse in appropriations." The absence of those data left the report without the usual year-over-year comparison, while monthly readings remained available. In a different measure, core prices rose at a calculated annualized pace of 3.7% over the three months ended in October, the fastest for this measure during the year, according to Axios. This figure describes the rate of change over a three-month period calculated on an annualized basis, not the annual core inflation rate.
Energy and food components moved differently from the previous month. Gasoline prices rose 1% in October, after a 9.1% jump in September, according to Axios. Grocery prices increased 0.4% after declining in September, while restaurant prices rose 0.5% during the month. In services, the measure excluding housing, energy and food rose 0.4% in October. Axios noted that pressure in this measure was linked to transportation, medical care and insurance, showing increases beyond the volatile energy and food categories.
Federal Reserve Governor Christopher Waller said a core inflation reading of 0.3% or higher could warrant stronger action by the central bank. He added that a 50-basis-point rate increase "should be considered" at the December meeting if the October reading came in at that level or higher. His stance came as price data brought the possibility of monetary tightening back into focus, with market bets on a half-point increase approaching 15% by midmorning Tuesday, Reuters reported. Bond markets saw a broad sell-off alongside the rise in those bets, according to the same source. These probabilities do not mean the December decision has been settled; Waller said the larger increase should be considered.
The inflation report shaped early trading, with stocks falling and Treasury yields rising, the Associated Press reported. The 10-year U.S. Treasury yield climbed to 4.99% from 4.88% late Monday. The yield had fallen since early October, when it topped 5.30%, the news agency said. The move puts the price reading in the context of investors repricing the path of interest rates and yields. The available facts did not include a figure for the dollar’s move or stock indexes, so the market picture here is limited to stocks and yields.
Attention is turning to October producer price data, which the Bureau of Labor Statistics is scheduled to publish on November 13, 2026. The bureau has also set December 10, 2026, at 8:30 a.m. Eastern time, for the release of the November Consumer Price Index. The November report will follow the October reading by about a month, while investors are watching the December meeting for clues on the path of interest rates. Waller had called for consideration of a 50-basis-point increase if October data showed core inflation at 0.3% or higher. These dates mark the next milestones for tracking U.S. price data and monetary policy debate.