U.S. Core Inflation Rises 0.3% in October, Exceeding Market Forecasts
Key Facts
The U.S. Consumer Price Index for All Urban Consumers rose 0.4% month over month in October, after a 0.6% increase in September, according to the Bureau of Labor Statistics. The core index, which excludes food and energy, rose 0.3%, matching the pace for the third consecutive month, Reuters reported. Market forecasts had pointed to a 0.2% increase in the core index, making the reading higher than expected. The figures showed price pressures persisted in the reporting month, despite a slowdown in the headline index from September’s reading. The data were released as markets tracked inflation and its implications for the Federal Reserve’s next decision.
Housing drove part of the monthly increase, rising 0.3% and accounting for more than 30% of the increase in the headline index, according to the Bureau of Labor Statistics. The food index also rose 0.5%, while the energy index increased 0.7% during the month. The increase was therefore spread across several major components, with housing contributing slightly more than a third of the overall rise. The core index rose 0.3% despite excluding food and energy, which Reuters described as the third consecutive monthly increase of the same size. The reading was above Reuters’ forecast of 0.2% for the core index.
Federal Reserve Governor Christopher Waller said before the October data were released that he leaned toward supporting a 25-basis-point rate increase at the December meeting, even if monthly inflation improved in October. He added that a core inflation reading near 0.3% or higher could make an increase of 50 basis points worth considering at that meeting. The remark places the core index reading at a level Waller explicitly cited in discussion of the potential size of the move. By contrast, Reuters reported that markets were pricing in a roughly 89% probability of a 25-basis-point increase the following month. The Fed had kept its benchmark interest rate range at 3.75% to 4.00% after its decision the previous month.
Speaking about the economic backdrop, Waller said the preliminary estimate of real gross domestic product showed growth of 3.4% in the third quarter. He added that jobs increased by 165,000 in October, with estimates for the previous two months revised up by a combined 85,000 jobs. These figures, as Waller presented them, show an economic context in which activity grew alongside continued employment growth. He said personal consumption expenditures inflation, the measure targeted by the Fed, rose 0.5% in September and 3.7% over 12 months. The core personal consumption expenditures measure rose 0.3% in September and 3.1% year over year.
Waller said inflation remained well above the Fed’s 2% target. He warned that energy price pressures could be greater than expected and could persist through 2027 if oil prices remained high. In another part of the price data, the Bureau of Labor Statistics did not publish October year-over-year changes for most Consumer Price Index series. The agency attributed this to October 2025 survey data not being collected during the funding lapse, which prevented publication of the October 2025 indices needed for comparison. As a result, these series did not include a year-over-year comparison for October 2026.
The Bureau of Labor Statistics is scheduled to publish the October Producer Price Index, including the core index, on November 13, 2026. The next Consumer Price Index reading, for November, is due on December 10, 2026, at 8:30 a.m. Eastern time. These dates are part of the data release schedule set by the agency, following the October consumer reading. Reuters reported that markets had priced in a roughly 89% probability of a rate increase in December, while Waller indicated that the level of core inflation could factor into the assessment of the size of the increase. The next data releases will allow investors to track price indicators ahead of the November consumer inflation report.