Consumer prices rose 0.4% from September to October, slightly above expectations but slower than the previous month as gas costs dipped. The Fed is expected to hike rates again in December.
US inflation rose 0.4% from September to October, slightly above expectations. Price increases still cooled because the cost of gas dipped during the month.
The Bureau of Labor Statistics did not release the usual year-over-year figure in the consumer price index report. The agency did not collect data in October 2025 during the government shutdown.
Energy costs drive the price pressure
Higher energy costs from the Iran war have been the main factor behind rising inflation, which has stayed above an annualized 3% since the war started in late February. In May, inflation hit 4.2%, a three-year high, before moving between 3.4% and 3.7%.
Energy prices still rose slightly in October, but by less than in September, when the monthly CPI change from August was 0.6%.
Gas prices fell from an average of $4.41 a gallon at the start of October to $4.22, according to AAA. That is still more than $1 a gallon above a year ago. On Monday, the average pump price dropped below $4 for the first time since July.
Fed faces another decision in December
In September, the Federal Reserve raised interest rates for the first time since 2023. It is expected to pursue another rate hike at its next meeting in December.
Labor market growth surpassed economists' expectations in October, which gives the Fed more room to hike. Because inflation is so closely tied to energy prices, however, it is unclear how much and how quickly a hike could ease prices.
Fed chair Kevin Warsh said on 28 October that the central bank is dedicated to making sure price increases ease up. The Fed's target inflation rate is 2%.
The data arrives after midterm elections that will give Democrats control of Congress. Republicans, including JD Vance, have pointed to frustration over gas prices as a reason the party fared poorly.
Source: The Guardian
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