Consumer prices rose 0.4% in October, more than expected, as core inflation held at 0.3% for a third month

US consumer prices rose 0.4% in October from the previous month, the Labor Department said, a larger increase than expected^1,2.

The monthly gain was driven by higher costs for shelter, food and energy². It was slower than the 0.6% increase recorded in September, according to the Bureau of Labor Statistics data³.

Gasoline prices rose 1% in October, a sharp slowdown from the 9.1% surge in September, the Labor Department said³. Core CPI, which excludes volatile food and energy prices, advanced 0.3% for the third straight month, with higher prices for recreation, medical care, car insurance and airline fares contributing to the gain³.

The report is the first snapshot of consumer prices since the midterm elections⁷.

Why it matters to investors

The figures show that even as gasoline prices steadied, inflation pressures elsewhere in the economy remained stubborn³. Consumer prices climbed notably again in October, extending a stretch of stubborn inflation¹.

The elevated reading was described as cementing a Federal Reserve rate increase⁴. Fed Chair Kevin Warsh has been cautious about speaking openly on the outlook, and a Federal Reserve governor gave a speech on the economy ahead of the release⁴.

Readings of the same report differed in emphasis. One account stressed that inflation remained hot in October³, while another framed the 0.4% rise as a sign that price increases cooled and gasoline costs dipped compared with September⁵.

Household mood moved in a slightly better direction before the release: consumer sentiment increased slightly at the end of October as gas prices eased, according to the University of Michigan’s Survey of Consumers⁵.

What to watch

The October report leaves out the usual 12-month changes. Without data for October of last year, the Bureau of Labor Statistics cannot calculate the 12-month percentage change for either the overall CPI or the core measure that excludes food and energy⁶. The agency did not publish an inflation report last October amid the government shutdown⁷.

That gap means the monthly changes in headline and core prices carry most of the weight in this release⁶.

The labour market is the other half of the picture. Employers added 165,000 jobs in October, well above average⁷.

Strong hiring, core inflation running at 0.3% a month and higher energy costs are the figures in front of Fed policymakers as a rate increase is debated^2,3,4,7.