Consumer Prices Rise More Than Expected as Shelter and Food Prices Jump
In October, the consumer price index rose 0.4% from September, with core inflation up 0.3%, as shelter, food, and energy costs driven the gain. Shelter and food components accounted for most of the monthly increase, while energy surged after September’s spike. The report also notes inflation pressures spreading beyond a few sectors, and the absence of year-over-year data due to the prior government shutdown. Financial markets priced in a higher likelihood of a larger Federal Reserve rate hike next month, signaling growing concern over sustained inflation. The outlook suggests momentum may slow if price pressures persist, keeping policy tightening in focus for the near term.
Dive Deeper:
Overall CPI rose 0.4% in October, while the core index excluding food and energy rose 0.3%. Economists had anticipated 0.3% overall and 0.2% core gains.
Shelter prices advanced 0.3%, contributing more than a third of the month’s total increase.
Food prices climbed 0.5%, with grocery costs up 0.4% and restaurant prices (food away from home) up 0.5%.
Energy rose 0.7% after a 5.2% jump in September, with gasoline up about 1% for the month.
There was no year-over-year CPI estimate released due to the previous October government shutdown.
Higher inflation readings intensified bets that the Federal Reserve will raise rates, with markets pricing in a larger half-point move next month.
In addition to housing and energy dynamics, prices for household furnishings rose 0.7% and major appliances jumped 1.4%, while medical drug prices ticked up 0.4%.