October Inflation Rises 0.4% as Goolsbee Warns of Growing Problem and Daly Leans Toward Tightening

Key Facts

The seasonally adjusted U.S. consumer price index rose 0.4% in October 2026, after a 0.6% increase in September, a reading that put inflation concerns back at the center of debate among Federal Reserve officials. Chicago Fed President Austan Goolsbee said the United States faces "a real inflation problem that is developing, and we will have to deal with it," according to Axios. Goolsbee described the inflation data as very concerning. By contrast, San Francisco Fed President Mary Daly said she leaned toward the need for more tightening, without calling for a rushed decision. The remarks put the October reading at the center of the monetary policy debate: monthly headline inflation slowed while core inflation continued to rise at a steady pace.

The consumer price index excluding food and energy rose 0.3% in October, the same monthly increase recorded in September and August. Daly said price pressures were no longer confined to energy and goods but had spread to services, where "inflation can be very sticky." Reuters reported that core CPI rose 0.3% for the third consecutive month in October. At that pace, the annualized increase is equivalent to about 3.6% or more, according to the report. The Federal Reserve targets inflation of 2%, measured by the 12-month change in the personal consumption expenditures price index, keeping persistent pressures central to officials’ assessments.

Among the components of the headline index, the shelter index rose 0.3% in October, accounting for more than 30% of the index’s monthly increase. The food index rose 0.5%, while the energy index increased 0.7% after a 5.2% jump in September. Daly said the labor market was stable and growth was good, but noted that price pressures were spreading to services. The Associated Press reported that increases covered a range of areas, including streaming services, beef and car insurance. The agency described this breadth as something that could push price increases across a wider range of the economy.

In a separate estimate of the inflation measure preferred by the Federal Reserve, Fed Vice Chair for Supervision Michelle Bowman said core personal consumption expenditures inflation may have risen to 3.3% year over year in October. Bowman estimated that tariffs, energy and price pressures related to artificial intelligence each accounted for about a quarter of the gap between core inflation and the target over the 12 months ending in September. She added that the remaining quarter likely reflected lingering effects from earlier inflation shocks. Bowman thus linked price pressures to several factors, including energy, tariffs and demand related to artificial intelligence. The October reading she cited points to continued core inflation under the PCE measure.

Officials differed over the timing and scale of tightening. Daly said some policymakers supported larger or faster increases starting at the policy meeting scheduled for December 8 and 9, but she did not join that group. In a separate speech, Fed Governor Christopher Waller said he would have supported a 25-basis-point increase at the December meeting. He added that an inflation reading far above his expectations could call for a stronger move. Waller had said he supported keeping the policy rate unchanged at the last meeting, despite believing that more tightening would soon be necessary. His positions reflect how the debate has shifted from the October decision to the size of a possible increase at the next meeting.

Waller said the latest October data from the Institute for Supply Management indicated the possibility of further price increases. He also pointed to Federal Reserve research suggesting that the pass-through of energy pressures to goods and services could last longer than usual. These concerns place the spread of inflation across services and goods, alongside energy’s impact, among officials’ considerations. At the same time, Daly said she leaned toward more tightening but saw no need to rush. The Federal Reserve’s inflation target remains 2%, measured by the PCE price index.

The Bureau of Labor Statistics was unable to collect survey data for October 2025 because of a lapse in appropriations. As a result, the bureau could not publish the year-over-year change for October 2026 for indexes without October 2025 data. This limitation applies only to those indexes and does not necessarily cover all consumer price index series. On the schedule for upcoming data, the bureau set December 10, 2026, at 8:30 a.m. Eastern time for the release of the November report. The Federal Reserve calendar also schedules the minutes of the committee meeting held on October 27 and 28 for release on November 18 at 2:00 p.m.