Monthly Price Growth Remains Above Expectations
U.S. inflation moderated in October 2026 without delivering the cooling economists had anticipated. The consumer price index rose a seasonally adjusted 0.4% from September, the Bureau of Labor Statistics reported Tuesday, November 10. That compared with a 0.6% increase in September and an expected October gain of 0.3%. Slower gasoline price growth helped restrain the headline measure, but food and housing continued to push household costs higher.
Core CPI, which excludes food and energy to provide a clearer view of underlying price trends, increased 0.3% for a third consecutive month. Mark Zandi, chief economist at Moody’s, told CNBC that sustained monthly gains closer to 0.2% would be more consistent with the Federal Reserve’s 2% annual inflation objective. Inflation has remained above the central bank’s target for more than five years.
December Policy Decision Faces Renewed Pressure
The Fed increased interest rates in September following a renewed acceleration in inflation that economists largely link to the war in Iran, then left rates unchanged at its October meeting. Zandi described the latest price growth as uncomfortably elevated and said it increased the likelihood of another rate rise in December. The report therefore leaves policymakers confronting persistent inflation even as the pace of overall monthly price increases has slowed.
Jason Pride, chief of investment strategy and research at wealth manager Glenmede, offered a similar assessment in comments reported by CNBC. He said investors did not need annual comparisons to recognize that inflation was not returning sustainably toward the Fed’s target. In his view, only unusually strong evidence of cooling would have argued against a December increase, and October’s figures pointed the other way. Those assessments are economists’ interpretations, not a commitment from the central bank.
Housing Adds Weight to a Report Missing Annual Comparisons
Shelter prices increased 0.3% in October and accounted for more than 30% of the overall CPI rise, according to the BLS. Housing carries the largest weight in the index, giving changes in the category considerable influence over the monthly result. Zandi identified it as potentially the biggest contributor to the stronger-than-expected reading, but said he did not expect that pattern to persist because it did not match the direction of U.S. market rents. He also cautioned that monthly CPI readings have been volatile.
The release did not include an annual inflation figure because the federal government shutdown a year earlier had interrupted normal data collection. That shutdown lasted from October 1 through November 12, 2025, and the BLS did not publish a CPI report for October 2025. The missing comparison limits the usual year-over-year assessment, although October’s monthly headline and core readings still provide evidence of continuing price pressure.
Fuel Costs Filter Into Food and Transportation
Gasoline prices rose 1% in October, sharply less than September’s 9.1% jump. Economists said the Iran war had lifted crude oil prices and, in turn, the cost of gasoline, diesel and jet fuel. Diesel has fallen from recent record highs but remains expensive. Thomas Ryan, senior North America economist at Capital Economics, told CNBC that its effect on transportation costs takes time to spread through consumer prices and could remain an inflationary force for another three to six months.
Food prices increased 0.5% after being unchanged in September. Zandi said that rise showed some evidence of elevated diesel costs working through the expense of delivering food to stores. Economists also linked higher airline ticket prices to jet fuel costs. Airfares rose 0.4% in October, following monthly increases of 1.2%, 2.7% and 3.8% in the preceding three months, respectively. The smaller October gain represented slower inflation in air travel, rather than a decline in fares.
Tariffs and AI Infrastructure Broaden the Inflation Challenge
Beyond housing, economists identified energy, tariffs and artificial-intelligence-related demand as important sources of pressure. Vanguard senior U.S. economist Josh Hirt characterized those three forces as unusually large shocks shaping core inflation. Zandi said elevated October inflation in goods such as toys, furniture and appliances likely reflected businesses passing tariff expenses to consumers. He expected the inflationary effect of Trump administration tariffs to fade by year-end, provided the White House did not pursue additional import taxes.
The expansion of data centers supporting AI has also raised electricity and consumer electronics prices, economists told CNBC. Ryan said the buildout had contributed to shortages of technology equipment, including memory chips used in household products such as iPhones. Together, these pressures complicate the outlook: slower gasoline inflation offers some relief, but delayed diesel-cost effects, tariff policy and AI-related demand remain uncertainties as the Fed approaches its December decision.
Source: CNBC