U.S. consumer prices rose 0.4 percent in October, exceeding economists’ forecasts and triggering a sharp sell-off across Wall Street.
The consumer price index increased 0.4 percent from September to October, according to data published by the Labor Department. The reading followed a 0.6 percent increase the previous month. Core inflation, which excludes volatile food and energy costs, rose 0.3 percent during October.
Analysts polled by Dow Jones had expected a 0.3 percent increase in the headline index. Energy prices continued to climb, rising 0.7 percent in October after a 5.2 percent jump in September, driven largely by higher costs stemming from the Iran war.
Gasoline prices cooled slightly in October, dropping from an average of $4.41 a gallon at the beginning of the month to $4.22 a gallon, though prices remained more than $1 a gallon higher than a year prior.
Price changes over last year (October CPI report) Fuel Oil: N/A* Gasoline: +37.4% Gas Utilities: N/A* Electricity: N/A* Overall CPI: N/A* Food away from home: N/A* Apparel: N/A* Shelter: N/A* Transportation: N/A* Medical Care: N/A* Food at home: N/A* New Cars: +0.7% Used Cars:…
No annual inflation reading was published by the Bureau of Labor Statistics for October due to a data gap stemming from a government shutdown the previous year, leaving economists at Oxford Economics to estimate that a topline rate would have reached 3.9 percent if data for October 2025 had been interpolated.
The CPI print said perhaps inflation is going to be a little stickier for a little longer,
said Tom Hainlin, national investment strategist at U.S. Bank.
After the firm September PCE inflation reading was released last month, Kevin Hassett allowed that October could return to the lower monthly readings seen in the summer, proving September was "a blip." But he added, "if October comes out really high, then I think the Fed would… pic.twitter.com/Gwzryh9R5Y
The hotter-than-expected inflation data immediately altered expectations for monetary policy. Ahead of the report, Federal Reserve Governor Christopher Waller said in a speech in London that a strong policy move might be necessary if the underlying inflation measure reached 0.3 percent.
If the October CPI inflation data out later today are similar to the past two monthly readings, with core CPI inflation around 0.3 percent or even higher, then a stronger policy move may be needed,
Waller said. In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting.
October’s firm inflation reading raises the question of whether Federal Reserve officials will accelerate increases at their December meeting or beyond. A big question—beyond the heavy focus on December (could AI tightening prompt another skip? does 0.4% on core PCE put a 50 in…
Waller added that hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.
Traders using the CME FedWatch tool responded by pricing in an almost 99 percent chance of a hike in December.
Additional commentary from Jason Pride, chief of investment strategy and research at Glenmede, noted in a note to investors that strong jobs data left inflation as the most important dimension of the central bank’s rate outlook going forward.
The bond market reacted swiftly to the inflation report. The yield on the 10-year Treasury note jumped to 5.01 percent, up from 4.88 percent late Monday. Meanwhile, the two-year Treasury yield climbed over 21 basis points for its biggest one-day jump since April last year.
Equities dropped across the board as borrowing costs climbed. The Dow Jones Industrial Average fell 319 points, or 0.6 percent. The S&P 500 fell 0.9 percent, while the Nasdaq Composite fell 1.1 percent.
"But if the October CPI inflation data out later today are similar to the past two monthly readings—with core CPI inflation around 0.3 percent or even higher—then a stronger policy move may be needed. In that case, I believe a 50 basis point hike in the policy rate should be… pic.twitter.com/3kCMy2p0BK
Rate-sensitive sectors absorbed heavy losses. Real estate and utilities each declined over 0.5 percent, while tech led losses with a 1.8 percent drop. Nvidia shares slipped 6.3 percent, leading technology losses amid an internal probe into spy claims, while broader semiconductor indexes fell.
Earlier coverage: US Stock Futures Rise as Tech and AI Shares Recover From October Selloff