U.S. consumer prices rose 0.4% in October on a seasonally adjusted basis, the Bureau of Labor Statistics reported Tuesday, coming in hotter than the 0.3% increase economists had expected and slowing only modestly from September's 0.6% pace.
Core inflation, which strips out volatile food and energy prices, rose 0.3% for a third consecutive month, matching the pace of August and September and topping the 0.2% forecast.
Energy prices rose 0.7% in October, sharply slower than September's 5.2% jump, while food prices climbed 0.5%. Shelter costs rose 0.3% and accounted for more than 30% of the month's overall increase, according to the bureau.
The release carried an unusual gap: the bureau published no year-over-year inflation rate for October, because it collected no consumer price data in October 2025 during last year's federal government shutdown, leaving no base for the annual comparison.
The hotter-than-expected reading strengthens the case for the Federal Reserve to raise interest rates at its December 9 meeting. Fed Governor Christopher Waller said in London just hours before the report that he was leaning toward a quarter-point increase, and traders are now pricing in a near-certain hike to a range of 4% to 4.25%, according to CME FedWatch.
The Fed raised its target range to 3.75% to 4% on September 16 and held it there on October 28, with two members favoring another increase. Real average hourly earnings were unchanged from September to October, the bureau reported separately, meaning paychecks barely kept pace with rising prices.
National Economic Council Director Kevin Hassett called the report "disappointing" in an appearance on Fox Business on Tuesday morning. President Trump had not publicly reacted to the data as of publication. The bureau is scheduled to publish November's consumer price index on December 10, one day after the Fed's policy decision.
