Anabelle Colaco
12 Nov 2026

WASHINGTON, D.C.: Higher costs for food and accommodation pushed U.S. consumer prices up more than expected in October, showing a strong buildup of underlying inflation pressures for the third straight month and leaving the Federal Reserve on course to raise interest rates next month.

The Consumer Price Index increased 0.4 percent last month after advancing 0.6 percent in September, the Labor Department said on November 10. It was the third consecutive month of CPI gains of 0.4 percent or more. Economists had forecast the CPI climbing 0.3 percent over the month.

Fed Governor Christopher Waller said on November 10 that the U.S. central bank should raise rates next month, adding that "a stronger policy move may be needed." Waller also raised the prospect of a 50-basis-point hike if core consumer prices, excluding food and energy, increased 0.3 percent or more from September, which they did.

Excluding the volatile food and energy components, the CPI rose 0.3 percent in October, the same margin for three months in a row. The so-called core CPI was forecast to have climbed 0.2 percent.

"Consumers' inflation nightmare continues with no relief in sight," said Christopher Rupkey, chief economist at FWDBONDS. "Fed officials are going to need to bring a bigger hose if they have any hope of putting the inflation fire out."

The Fed left its benchmark overnight interest rate in the 3.75 percent-4.00 percent range last month. Economists said only a substantial sell-off on the equity markets or widening credit spreads would prevent the Fed from tightening monetary policy in December.

Annual consumer inflation jumped 3.7 percent in September, running well above the Fed's two percent target. The Labor Department's Bureau of Labor Statistics did not publish year-over-year readings for October because last year's federal government shutdown prevented the collection of consumer price data in October 2025, leaving no comparison base.

The U.S.-Israeli war with Iran has boosted oil prices, combining with the import tariffs implemented by the Trump administration last year to lift the cost of living. High inflation contributed to the heavy losses suffered by President Donald Trump's Republican Party in the midterm elections last week.

Food prices surged 0.5 percent after barely rising in the prior three months. Grocery store prices rebounded 0.4 percent, boosted by a 0.9 percent jump in the cost of beef. Higher supermarket prices could reflect more expensive diesel fuel. Food prices away from home surged 0.5 percent after rising 0.2 percent in September.

Shelter, which includes rents, hotel and motel rooms, accounted for more than 30 percent of last month's CPI increase. Shelter costs rose 0.3 percent after climbing 0.4 percent in September.

Gasoline prices climbed 1.0 percent after soaring 9.1 percent. Though diesel prices have come down from record highs, they rose 2.7 percent last month after increasing 11.9 percent in September.

Prices for hotel and motel rooms rose 0.6 percent. Airline fares rose 0.4 percent, while motor vehicle insurance advanced 0.7 percent. Household furnishings and supplies prices rebounded 0.7 percent, suggesting that some pass-through from tariffs remained.

The missing data from last year has no impact on the calculation of the Personal Consumption Expenditures Price Index readings the Fed tracks to gauge progress toward its inflation target. Both measures are running above three percent.