Consumer Prices Rose 0.4% in October, Topping Forecasts as Fed Eyes December Hike

Prices paid by U.S. consumers rose 0.4% in October, a slower pace than September’s 0.6% jump but faster than economists had expected, the Bureau of Labor Statistics reported Tuesday. The reading strengthens the case for the Federal Reserve to raise interest rates again when it meets Dec. 8–9.

Core prices, which leave out volatile food and energy costs, climbed 0.3% for the third month in a row. Economists surveyed by Dow Jones and by Reuters had forecast 0.3% for the overall index and 0.2% for the core measure, according to CNBC and Reuters.

No yearly rate this month

The usual headline figure, the 12-month inflation rate, is missing from this report. BLS said it did not collect survey data for October 2025 because of last year’s lapse in federal funding, so it cannot calculate year-over-year changes for most categories.

Where comparable data exist, the BLS release shows gasoline prices 37.4% higher than a year earlier, before seasonal adjustment. Reuters noted that the war with Iran has pushed up oil prices this year.

Where prices rose

• Housing: The shelter index rose 0.3% and accounted for more than 30% of October’s overall increase, BLS said. Rent rose 0.2%.

• Groceries and dining out: Food at home rose 0.4%, led by snacks (up 1.0%) and beef (up 0.9%). Restaurant and other food away from home rose 0.5%.

• Energy: The energy index rose 0.7%, far below September’s 5.2% surge. Gasoline rose 1.0% after seasonal adjustment, though BLS said unadjusted pump prices actually fell 0.7% for the month. Electricity rose 0.9%, while natural gas fell 0.8%.

• Other costs: Motor vehicle insurance rose 0.7%, recreation 0.8% and hospital services 0.8%.

A few categories got cheaper. Used cars and trucks fell 1.2% in October, and communication services slipped 0.1%.

What it means for interest rates

The Fed held its benchmark rate in a range of 3.75% to 4% at its October meeting. After Tuesday’s report, futures traders fully priced in a quarter-point increase in December, CNBC reported, citing CME Group’s FedWatch tool, and odds of a larger half-point move rose from near zero to about 14%.

Fed Governor Christopher Waller said in London on Tuesday morning, before the release, that a core reading around 0.3% would put a half-point hike on the table, according to CNBC and Reuters. Dallas Fed President Lorie Logan said after the report that she sees a need for two more quarter-point increases.

Higher Fed rates tend to raise borrowing costs on credit cards, auto loans and other variable-rate debt. Stocks fell and Treasury yields rose after the report, CNBC reported.

What comes next

BLS is scheduled to release November’s consumer price data on Thursday, Dec. 10, the day after the Fed’s next rate decision.