The costs of goods and services rose more than expected in October, providing new warning signals to the Federal Reserve in its fight to reduce inflation.
The consumer price index, a broad gauge of costs in the U.S. economy, rose a seasonally adjusted 0.4% for the month, the Bureau of Labor Statistics reported Tuesday. Economists surveyed by Dow Jones expected an increase of 0.3%.
Excluding volatile food and energy products, the so-called core CPI increased by 0.3% against a forecast of a gain of 0.2%.
The headline CPI rose 0.6% in September while the core CPI rose 0.3%.
The BLS has not estimated an annual rate. The government shutdown last year prevented the bureau from collecting enough data in October 2025, so there is no comparable figure to use. However, the report included annual figures for some individual items for which it was able to collect data.
Stock market futures fell after the release, while Treasury yields jumped. Traders have fully priced in a quarter-percentage-point increase at the Fed’s next meeting on Dec. 8-9 and have pegged the odds a half-point at 13.6%, according to CME Group’s FedWatch.
“It was the report the market could least afford to see,” said Karen Manna, fixed income investment strategist at Federated Hermes. “A higher inflation number raises new questions about whether the Fed has done enough to contain price pressures and heightens the risk that interest rates will have to rise and stay there for longer.”
The report comes at a critical time for the Federal Reserve as it considers its next interest rate decision. At its October meeting, central bank officials voted 10-2 to keep their key interest rate in a range between 3.75% and 4% pending available data.
Even though gasoline prices have fallen in recent weeks, the energy index has increased by 0.7% and the gasoline index by 1%. The natural gas index, however, fell 0.8%.
Food prices rose 0.5%, driven up by increases of 1% for snacks, 0.9% for beef and 0.5% for meats, poultry, fish and eggs. Transportation services jumped 0.8%. Prices for new vehicles rose 0.2%, but prices for used cars and trucks fell 1.2%.
Housing costs rose 0.3%, which the BLS says represents more than 30% of the overall increase.
Apparel, a tariff-sensitive sector, rose just 0.1%, while prices for medical care products rose 0.5%. Airfares accelerated by 0.4%.
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