US consumer prices rose 0.4% in October, slowing from September’s 0.6% increase but exceeding economists’ 0.3% forecast. Housing and food costs pushed up the overall index, while core CPI rose 0.3% for a third consecutive month. Inflation remains above the Federal Reserve’s 2% target, a factor that could shape expectations for its December rate decision.
Mark Zandi, chief economist at Moody’s, called the current pace of inflation “unsettling” and said it increases the likelihood of another Fed rate hike in December. The central bank raised rates in September and held them steady at its October meeting. Josh Hirt, a senior US economist at Vanguard, attributed persistent core inflation pressures to tariffs, energy prices and demand linked to artificial intelligence.
Housing accounted for more than 30% of October’s increase
Housing prices rose 0.3% in October, accounting for more than 30% of the monthly CPI increase, according to the Bureau of Labor Statistics. Housing carries the largest weight in the index, making changes in the category a significant influence on the overall reading.
Zandi said housing may not continue to add as much to inflation, as the recent CPI trend does not match movements in US market rents. He also cautioned that monthly changes in several CPI components have been volatile, making it difficult to draw firm conclusions from a single report.
Gasoline inflation cooled, while food and airfares rose
Energy remained a source of inflation pressure. Oil prices have been pushed higher by the war in Iran, adding to costs for products including gasoline, diesel and jet fuel. Gasoline prices rose 1% in October, however, well below September’s 9.1% increase. Diesel prices have eased from recent highs but remain elevated.
Thomas Ryan, a senior North America economist at Capital Economics, said higher diesel costs filter through the transport network to other goods, with effects that can persist for three to six months. Food prices rose 0.5% in October after holding steady in September. Zandi said more expensive diesel raises the cost of delivering food to retailers.
Airfares also face pressure from fuel costs. Ticket prices rose 0.4% in October, a slower pace than the increases of 1.2%, 2.7% and 3.8% recorded in the previous three months. Prices continued to rise, but the rate of increase eased sharply.
Tariffs and AI investment add to cost pressures
Zandi said the inflationary impact of tariffs imposed by the Trump administration could fade by year-end if the White House does not pursue additional import taxes. Prices for some physical goods, including toys, furniture and household appliances, rose at a faster pace in October. The increases may reflect businesses passing tariff costs on to consumers.
Investment in AI infrastructure is creating another source of cost pressure. Economists say data-center expansion is adding to demand for electricity and consumer electronics. Ryan said construction of data centers has increased demand for technology equipment, tightening supplies of some products, including memory chips used in phones and other consumer electronics.
Core CPI remains firm; annual figure not released
Core CPI, which excludes volatile food and energy prices, rose 0.3% in October, matching the increases in August and September. Zandi said monthly gains of around 0.2% would be more consistent with the Fed’s 2% annual inflation target. US inflation has remained above that goal for more than five years.
The Bureau of Labor Statistics did not publish an annual inflation rate with the October report. A federal government shutdown that ran from October 1 to November 12, 2025, disrupted the agency’s data collection and prevented the October 2025 CPI report from being released on schedule.
Jason Pride, chief of investment strategy and research at Glenmede, said the latest monthly figures point to no sustained move toward the Fed’s inflation target, even without year-over-year data. The October report shows core prices continuing to rise at 0.3% a month, while housing and food remained contributors to the overall increase.