WASHINGTON — Consumer prices rose more than economists expected in October, keeping inflation pressures elevated and increasing expectations that the Federal Reserve will raise interest rates again in December.
The Consumer Price Index increased 0.4% on a seasonally adjusted basis after rising 0.6% in September, the Bureau of Labor Statistics reported Tuesday. Economists surveyed by Reuters had forecast a 0.3% increase.
“Inflation was warmer than expected in October, setting the stage for rate hikes. Food and energy prices led the way, but inflation was broad-based and included key categories like new vehicles and shelter costs,” said Curt Long, chief economist with America’s Credit Unions. “With the labor market solidifying, the Federal Reserve will likely raise interest rates next month and may use the December meeting to communicate more rate hikes in early 2027. Credit unions are healthy, resilient, and committed to delivering financial benefits to their members regardless of the interest rate environment.”
Excluding volatile food and energy prices, the so-called core CPI rose 0.3%, matching its increases in August and September. Reuters reported that economists had expected a 0.2% rise in the core measure.
Data Point Not Published
The government did not publish most 12-month inflation comparisons for October. The BLS said a lapse in federal appropriations prevented it from collecting survey data in October 2025, leaving the agency without the year-earlier figures needed to calculate those changes. Reuters reported that annual inflation had reached 3.7% in September.
Food, Housing and Energy Costs
The BLS reported that food prices increased 0.5% in October, including a 0.4% rise in grocery prices and a 0.5% increase in restaurant prices. Beef prices climbed 0.9%, while snacks rose 1%.
Shelter costs increased 0.3% and accounted for more than 30% of the overall monthly increase. Energy prices rose 0.7%, including a 1% increase in gasoline and a 0.9% rise in electricity. Used car and truck prices fell 1.2%.
Interest Rate Implications
The stronger-than-expected report reinforced expectations of another Fed rate increase in December. Reuters reported that Fed Gov. Christopher Waller had said policymakers should consider raising borrowing costs, potentially by half a percentage point if inflation worsens.
James McCann, senior economist at Edward Jones, told Reuters the report raised concerns that underlying price pressures were building again and increased the risk of further monetary tightening.
