October Inflation Rises 0.4% as Goolsbee Warns of Growing Problem and Officials Back Tightening

Key Facts

Chicago Fed President Austan Goolsbee warned that the United States faces a growing inflation problem, calling the price data concerning as other officials urged keeping monetary tightening on the table. Goolsbee said, "We have a real inflation problem developing, and we will have to deal with it." San Francisco Fed President Mary Daly said she leaned toward further tightening being necessary. Bureau of Labor Statistics data showed the consumer price index rose 0.4% in October, after a 0.6% increase in September. The comments and data together underscore persistent price pressures, despite a slower monthly increase in the headline index than in the prior month.

Daly said price pressures were no longer confined to energy and goods but had spread to services, where inflation can be highly sticky. She described the situation by saying, "Price pressures are spreading beyond energy and goods, and into services, where inflation can be highly sticky." In October, the services index excluding energy services rose 0.3%, as did the medical care index. The index for all items excluding food and energy recorded a monthly increase of 0.3%, the same rate as in September and August. These readings support Fed officials' focus on persistent services inflation, even as the pace of the headline index's increase eased from September.

Among the components of the headline index, the food index rose 0.5% in October, while the energy index increased 0.7% after a 5.2% jump in September. The shelter index also climbed 0.3%, accounting for more than 30% of the monthly increase in the headline index. Daly said the labor market was stable and growth was good, but stressed that there was a clear inflation problem. She added, "We have a stable labor market, good growth, but we definitely have an inflation problem now." Taken together, the indicators show monthly increases across food, energy, shelter and services, though the pace varied by component.

Daly said rising bond yields and tighter financial conditions gave the central bank more time to calibrate its decisions, despite her inclination toward further tightening. She said higher yields were "welcome" and tighter financial conditions "give us extra time to make carefully calibrated decisions." The Fed targets inflation at 2%, measured by the 12-month change in the personal consumption expenditures price index. Daly previously said some policymakers favored larger or faster increases starting at the December 8 and 9 meeting, but she did not join that position. Her comments underscore her preference to keep tightening as an option while using the time provided by financial conditions to determine the pace of action.

In a separate reading of price pressures, Fed Vice Chair for Supervision Michelle Bowman said core personal consumption expenditures inflation may have risen to 3.3% year over year in October. She estimated that tariffs, energy and AI-related price pressures each accounted for about a quarter of core inflation above target in the 12 months through September, with the remaining quarter likely due to lingering effects of earlier shocks. She said October data point to continued inflationary pressures, while labor-market conditions appear to be improving. Separately, Fed Governor Christopher Waller said he supported keeping monetary policy at its current level at the latest meeting because the committee's communication about expected tightening had led markets to price in some increases in advance. He added that October purchasing managers' index data point to possible further price increases, and that the pass-through of energy pressures to goods and services may be more persistent than before.

Fed officials differed over the pace of future moves. Dallas Fed President Lorie Logan said she supported two further increases of a quarter percentage point each, with the possibility of moving faster over the winter. Daly, by contrast, said some officials supported larger or faster increases at the December meeting, but she was not among them. The Fed left interest rates unchanged at about 3.9% at its late-October meeting, after raising them at the September meeting. Waller said the economy grew at a real rate of 3.4% in the third quarter's preliminary estimate, supported by consumer spending and strong investment. These positions put inflation and the resilience of economic activity at the center of the debate over upcoming monetary policy.

The October reading came amid a lack of year-over-year comparison data for some consumer price index series. The Bureau of Labor Statistics said it was unable to collect survey data for October 2025 because of a lapse in appropriations. As a result, the bureau did not publish the October 2026 annual change for series lacking data for that month in the prior year. In markets, the S&P 500 fell 0.4% on Tuesday, November 10, the Nasdaq Composite dropped 0.7%, and Treasury yields rose. Markets are awaiting the release on November 18 of minutes from the Federal Open Market Committee meeting held on October 27 and 28. The November consumer price index report is also scheduled for release on December 10, 2026, at 8:30 a.m. Eastern time.