U.S. Consumer Prices Increased More Than Expected in October

Summary

• The headline CPI increased 0.4% m/m in October, exceeding the expected 0.3% gain.
• The core index rose 0.3% m/m, surpassing the anticipated 0.2% increase.
• Shelter prices increased 0.3% m/m, accounting for more than 30% of the headline rate increase.
• Food prices jumped 0.5% m/m, marking the largest annual increase this year.
• Energy price increases slowed to 0.7% m/m following a 5.2% m/m rise in September.
• Haver Analytics estimated the October 2025 value to calculate year-over-year rates due to the lack of data from the previous year's government shutdown.
• The headline year-over-year rate rose to 4.1%, the highest level since May.
• The core year-over-year rate increased to 2.8%, also reaching its highest point since May.
• Financial markets reacted negatively to the stronger-than-expected inflation report.
• Fed funds futures markets currently price in a 99% probability of a 25 basis point rate increase at the December 8-9 FOMC meeting.
• One Fed official suggested that the current inflation environment might warrant a rate increase larger than 25 basis points.
• Shelter & food price increases combined accounted for almost 50% of the headline rate growth.
• Goods prices excluding food & energy rose 0.2% m/m, tempered by a 1.2% m/m decline in used car & truck prices.
• Services prices excluding energy increased 0.3% m/m, with transportation services rising 0.8% m/m.
• Medical services prices rose 0.3% m/m, matching the September gain.
• A core measure excluding energy services & two rent measures increased 0.4% m/m, with its year-over-year rate rising to 3.5%.