US consumer prices rise 0.4% in October, hotter than economists expected

What happened

The consumer price index (CPI), a broad measure of what households pay for goods and services, rose a seasonally adjusted 0.4% in October after a 0.6% jump in September, according to the Bureau of Labor Statistics (BLS). Economists polled by Dow Jones had expected 0.3%, CNBC reported. Core CPI, which leaves out volatile food and energy costs, increased 0.3% for a third straight month, against a 0.2% forecast. Shelter rose 0.3% and made up more than 30% of the overall gain, the BLS said. Food climbed 0.5% and energy 0.7%. There is no annual inflation rate this time, because a government shutdown stopped the BLS from collecting most October 2025 prices.

What it means

The missing yearly figure is unusual. The BLS could not gather enough data in October 2025, when a lapse in federal funding shut much of the government from October 1 to November 12, according to CNBC. Without a starting point, the bureau cannot calculate 12-month changes for most categories. It did publish a few: gasoline was 37.4% more expensive than a year earlier before seasonal adjustment, new vehicles cost 0.7% more and used cars and trucks 3.3% less. Jason Pride of wealth manager Glenmede argued to CNBC that the monthly numbers alone show prices are off track for the Fed's 2% goal.

Housing was the biggest single driver. Shelter is the largest part of the index, so even a modest 0.3% rise carries a lot of weight. Owners' equivalent rent, an estimate of what homeowners would pay to rent their own home, rose 0.3% and rent 0.2%. Mark Zandi, chief economist at Moody's, told CNBC he does not expect that pressure to last, since it does not match the path of market rents.

Energy cooled sharply from September, when its index jumped 5.2%, but it still rose. The gasoline index gained 1.0% on a seasonally adjusted basis, even though raw pump prices fell 0.7% in the month. Electricity climbed 0.9%, which CNBC linked to power demand from artificial intelligence data centers, while natural gas fell 0.8%. Economists told CNBC that higher diesel costs from the Iran war are slowly feeding into other prices, such as food, which rose 0.5% after holding flat in September. Snacks gained 1.0% and beef 0.9%. Transportation services jumped 0.8%, motor vehicle insurance 0.7% and recreation 0.8%, while used car prices dropped 1.2%.

The Fed's reaction is the key question for markets. The central bank raised rates in September and left its benchmark range at 3.75% to 4% in October, CNBC noted. After the report, traders fully priced in a quarter-point hike at the December 8-9 meeting and put the chance of a half-point move at 13.6%, up from roughly zero, based on CME Group's FedWatch tool. Dallas Fed President Lorie Logan said she sees a need for two more quarter-point increases. Stocks fell and Treasury yields rose after the data was published.

The bull case

Inflation slowed from September's 0.6% pace, and the biggest driver, shelter, may ease if market rents keep cooling, as Moody's Zandi expects. Gasoline's surge has faded and used car prices fell. A Fed that acts firmly now could bring inflation down faster, which over time may support bond prices and protect the buying power of savers and workers.

The bear case

Core inflation has held at 0.3% for three months, above the roughly 0.2% monthly pace that fits the Fed's target, according to Zandi. Pressure from diesel, tariffs and AI-driven electricity demand may linger. That makes higher rates more likely, which tends to lift borrowing costs for homes, cars and businesses and can weigh on share prices and bond values.