US Consumer Prices Rise 0.4% in October, Beating Forecasts as Fed Hike Looms

WASHINGTON — US consumer prices rose more than expected in October, complicating the Federal Reserve’s fight against inflation and putting a December interest rate rise firmly back on the table.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% on a seasonally adjusted basis in October, after rising 0.6% in September, the Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast a 0.3% rise.

Core inflation, which strips out volatile food and energy prices, increased 0.3% for a third consecutive month — also above the 0.2% forecast. The result leaves underlying price pressure stubbornly in place even as the headline rate cooled from September’s pace.

The report landed on a market already braced for bad news. The Dow jumped more than 540 points on Monday as traders bet that diplomacy could bring the eight-month Iran war to an end, but attention quickly turned to Tuesday’s inflation figures as the next test for stocks and for borrowing costs.

Energy cools, but food and shelter keep climbing

The slowdown in the headline rate was driven largely by energy. Energy prices rose 0.7% in October, sharply slower than the 5.2% jump recorded in September. Petrol prices rose 1.0% on a seasonally adjusted basis, far below September’s 9.1% surge.

Food prices moved in the other direction. The food index increased 0.5% in October, with food bought for consumption at home up 0.4% and food away from home up 0.5%. Grocery prices, which had slipped 0.1% in September, rose 0.4%.

Shelter remained the single biggest driver of the monthly increase. The shelter index rose 0.3% in October and accounted for more than 30% of the monthly rise in the all-items index, according to the Bureau of Labor Statistics. Rent of primary residence rose a cooler 0.2%.

The missing annual figure

The October release comes with an unusual gap: there is no official annual inflation rate. The Bureau of Labor Statistics did not publish year-over-year readings because it could not collect consumer price data in October 2025 during a lapse in federal appropriations, leaving no comparison base.

“Because the October 2025 indexes were never built, the BLS cannot publish 12-month percent changes for October 2026 for the indexes missing that base month,” the bureau explained in its release.

Economists estimate that headline annual inflation remains likely in the high 3% range, but that is an estimate, not an official figure. September’s published annual rate of 3.7% remains a September figure and cannot be substituted for October’s missing comparison.

What it means for the Fed

The hotter-than-expected reading puts the Federal Reserve on course to raise interest rates next month, Reuters reported. The central bank’s next policy meeting is scheduled for December 8-9, and the October figures strengthen the case for a rise after months of debate over whether inflation had been beaten.

Markets steadied after a sharp fall last week, but the inflation data has revived questions about how far borrowing costs still need to go. The next CPI report, covering November prices, is scheduled for December 10 — one day after the Fed’s December meeting ends.

The labour market backdrop remains mixed. Job openings jumped to 7.52 million in September, according to the bureau’s separate JOLTS survey, while layoffs fell to an 18-month low. Yet real average hourly earnings for all employees were unchanged from September to October, on a seasonally adjusted basis, meaning pay packets did not gain ground against rising prices last month.

What it means for households

For households, the report offers little relief. Prices are still rising across the categories that dominate family budgets — food, rent and everyday essentials — even if the pace has eased from September’s jump.

The absence of an annual inflation figure also makes it harder for workers and employers to judge how far pay has kept up over the past year. Wage negotiations, benefit adjustments and household budgets all lean on that year-over-year number, and for October it simply does not exist.

What is clear is that inflation has not gone away. Three straight months of 0.3% core readings point to price pressure that is broad and persistent, and the Federal Reserve now faces a December decision with less room to wait.

Frequently asked questions

How much did US consumer prices rise in October 2026?

The Consumer Price Index rose 0.4% on a seasonally adjusted basis in October, after a 0.6% rise in September. Economists polled by Reuters had expected a 0.3% increase.

Why is there no annual inflation rate for October?

The Bureau of Labor Statistics could not collect price data in October 2025 during a lapse in federal appropriations, so there is no comparison base from a year earlier. It therefore did not publish 12-month changes for most October indexes.

Will the Federal Reserve raise interest rates in December?

The hotter-than-expected October figures have put a December rate rise back in focus. The Fed’s next meeting is December 8-9, and the November CPI report follows on December 10.