US consumer prices rise above expectations in October

The Consumer Price Index rose 0.4% last month after advancing 0.6% in September, the Labor Department's Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast the CPI climbing 0.3% over the month.

The BLS did not publish year-over-year inflation readings because last year's federal government shutdown prevented the collection of consumer price data in October 2025, leaving no comparison base. Annual consumer inflation jumped 3.7% in September.

Inflation is running well above the US central bank's 2% target. The US-Israeli war with Iran has boosted oil prices, combining with the import tariffs implemented by the Trump administration last year to lift the cost of living.

High inflation contributed to the heavy losses suffered by President Donald Trump's Republican Party in the midterm elections last week.

Excluding the volatile food and energy components, the CPI increased 0.3% last month after gaining 0.3% in September. The so-called core CPI was forecast to have climbed 0.2% in October.

The missing data from last year have no impact on the calculation of the Personal Consumption Expenditures Price Index readings that are tracked by the Fed to gauge progress toward its inflation target. Both measures are running above 3%.

Early on Tuesday, financial markets fully priced in a 25 basis points rate hike next month. The Fed left its benchmark overnight interest rate in the 3.75%-4.00% range last month.

Economists said only a substantial sell-off on the equity markets or widening credit spreads would prevent the Fed from tightening monetary policy in December. US stocks slumped last week after the Democrats' sweeping victory fanned fears that new regulations could dent the durability of the AI trade. Stocks rallied on Monday as oil prices fell.