U.S. inflation rose 0.4% in October, exceeding expectations and adding to concerns on Wall Street that the Federal Reserve could raise interest rates again. The latest Consumer Price Index report from the Bureau of Labor Statistics — the government’s monthly gauge of price changes across a basket of consumer goods and services — showed higher prices for groceries, housing, electricity, insurance, health care and several other categories.

The increase followed a 0.6% rise in September. Although October’s reading was lower, the data showed that inflationary pressure remains present across broad areas of household spending.

The figures create a difficult backdrop for the Federal Reserve, which aims for 2% inflation over the longer run. At its October meeting, policymakers voted 10-2 to keep the federal funds rate in a range of 3.75% to 4% while waiting for additional economic data. Another rate increase is not assured, but continued price growth could complicate the central bank’s decisions.

Housing and food contribute to October’s increase

Housing accounted for more than 30% of the overall monthly increase. Shelter is the largest component of the CPI basket, so its month-to-month moves carry outsized weight in the overall index. Rent, owners’ equivalent rent and lodging away from home all became more expensive.

The BLS said, “The shelter index increased 0.3 percent over the month after rising 0.4 percent in September. The index for owners’ equivalent rent rose 0.3 percent in October, and the index for rent increased 0.2 percent. The lodging away from home index rose 0.6 percent in October after rising 2.0 percent the previous month.”

Food prices also resumed their increase after remaining unchanged in September. The BLS said, “The food index rose 0.5 percent in October after being unchanged in September. The food at home index increased 0.4 percent over the month. Four of the six major grocery store food group indexes increased in October, while one index decreased.”

Among individual categories, snacks rose 1%, while beef increased 0.9%. The index covering meat, poultry, fish and eggs rose 0.5%. Fruits, vegetables and dairy products each increased 0.6%, and other groceries rose 0.7%.

Energy prices also increased, although the monthly gain was smaller than in September. The energy index rose 0.7% after climbing 5.2% the previous month. Gasoline prices increased 1% following a 9.1% rise in September, while fuel oil increased 2% and electricity rose 0.9%.

Natural gas service declined 0.8%, while energy services increased 0.6%. Before seasonal adjustment, gasoline prices fell 0.7%.

Core CPI increases for a third consecutive month

Core CPI, which excludes food and energy, increased 0.3% for the third consecutive month. The core measure draws close attention from economists and policymakers because food and energy prices can swing sharply from month to month, making it a steadier gauge of underlying price trends. Recreation, motor vehicle insurance and household expenses were among the categories contributing to the increase.

The BLS said, “The index for recreation increased 0.8 percent over the month after rising 0.5 percent in September. The motor vehicle insurance index rose 0.7 percent in October, and the household furnishings and operations index increased 0.2 percent.”

Transportation services rose 0.8%, education increased 0.3% and new vehicles became 0.2% more expensive. Apparel, airline fares and personal care also recorded increases.

Health care costs accelerated as well. Medical care inflation reached 0.3%, compared with 0.1% in September. Hospital services rose 0.8%, physicians’ services increased 0.4% and prescription drugs rose 0.3%. Medical care commodities increased 0.5%.

Used cars and trucks were among the few categories to record a notable decline. The BLS said, “The index for used cars and trucks declined 1.2 percent in October after rising 0.7 percent in September. The communication index decreased 0.1 percent over the month.”

The broader CPI-U reached 337.511, an increase of 0.2% before seasonal adjustment. The CPI-W, which covers urban wage earners and clerical workers and is widely used for cost-of-living adjustments, reached 331.147 after rising 0.1%. The chained CPI increased 0.2%, although recent readings remain subject to revision.

Year-over-year comparisons remain incomplete because a 2025 government funding lapse prevented October data collection, leaving fewer base figures for measuring annual price trends. The available figures showed gasoline prices up 37.4% from a year earlier, new vehicles up 0.7% and used vehicles down 3.3%.

The October report leaves the Federal Reserve to assess whether inflation is proving more persistent than expected as it considers its next interest-rate decision. Attention now turns to the additional economic data policymakers said they are waiting for as they weigh their next move. Original source: Cryptopolitan.