U.S. Consumer Prices Rise 0.4% in October, Pressuring Fed on Rates
U.S. consumer prices rose 0.4% in October, above economists’ expectations but slower than September’s increase. The report did not include an annual inflation figure, while economists cited housing, food and other pressures as reasons inflation remains elevated.
The U.S. consumer price index rose 0.4% in October 2026, the Bureau of Labor Statistics said Tuesday, exceeding economists’ expectations and adding to pressure on the Federal Reserve to consider another rate increase in December. The report did not include an annual inflation figure.
Prices rose more slowly than in September, when the index increased 0.6%. Economists had expected October’s monthly increase to be 0.3%.
“It's uncomfortably high,” said Mark Zandi, chief economist at Moody’s. “The Fed's not going to be happy about it. It certainly makes it more likely we get another rate increase in December.”
The Federal Reserve uses inflation data to guide interest-rate policy. It raised rates in September amid a pickup in inflation and held them steady at its October meeting.
The Bureau of Labor Statistics did not publish an annual inflation figure because a federal government shutdown in October 2025 disrupted its data collection and prevented it from releasing that month’s inflation report.
Economists also track core CPI, which excludes food and energy to help assess underlying price pressures. That measure rose 0.3% in October, matching its increases in September and August.
A monthly core reading of about 0.2% would be more consistent with the Fed’s 2% annual inflation target, Zandi said. Inflation has remained above that target for more than five years.
Jason Pride, chief of investment strategy and research at wealth management firm Glenmede, said investors could see the strength of the report without an annual comparison.
“Investors do not need year-over-year figures to see that this was a hot inflation report and that prices are not on a sustainable path back toward the Fed's 2% target,” Pride wrote in an email Tuesday.
He added: “It would have taken exceptional evidence of disinflation to dissuade the Fed from raising rates in December, and this report delivered the opposite.”
Housing was among the main contributors to October’s increase, Zandi said. The shelter index rose 0.3%, accounting for more than 30% of the overall CPI increase, according to the Bureau of Labor Statistics.
Zandi said he did not expect that shelter contribution to persist because it did not match the trend in U.S. market rents. He also described the monthly inflation data as volatile: “It does feel like we have a high level of monthly volatility” and “It's all over the map month to month.”
Economists cited the Iran war, artificial intelligence, tariffs and housing among the factors behind October’s elevated inflation. Food and housing also pushed prices higher, while a more moderate rise in gasoline prices helped slow the monthly increase.
