US Inflation Runs Hotter Than Expected in October as CPI Rises 0.4% — With No Annual Rate to Compare It To

WASHINGTON — US inflation came in hotter than expected in October, with consumer prices rising 0.4% from September, the Bureau of Labor Statistics (BLS) reported on Tuesday, 10 November 2026, in a release that carried an unusual gap: there was no annual inflation rate to compare it with. Published at 8:30 a.m. ET (20:30 WIB), it showed price pressures stronger than forecast, led by housing costs, sharpening debate over a December Federal Reserve rate rise. Core prices rose 0.3% for a third consecutive month, while the headline increase topped the 0.3% rise economists polled by Reuters had expected.

Illustration: An AI-generated illustration of rising grocery prices in a US supermarket aisle, with a shopping cart and price tags. This is an illustration, not a photograph of a real store or event.

What Happened

The October consumer price index (CPI) rose 0.4% on a seasonally adjusted basis, the BLS said, after a 0.6% increase in September. That was above the 0.3% gain forecast by economists in a Reuters poll, so inflation ran faster than Wall Street had anticipated, though the increase was smaller than September's. Core CPI, which excludes food and energy, increased 0.3% in October, matching its rises in August and September. Economists polled by Reuters had forecast 0.2%, so that measure, too, came in hotter than expected.

What made the release different from every routine CPI report before it was what it did not contain. The BLS published no 12-month, or year-over-year, inflation rate for October 2026. The bureau explained that it did not collect survey data for October 2025, during last year's lapse in appropriations — the 2025 government shutdown — so there is no October 2025 price level to compare against. Without that base, an annual rate cannot be calculated. The last available annual reading, for September, was 3.7%.

Shelter was again the main engine of the monthly increase, rising 0.3% and accounting for more than 30% of the monthly all-items increase, according to the BLS. Even a modest monthly rise in shelter carries outsized weight because housing makes up such a large share of household spending, so steady increases there keep a floor under overall inflation even when other categories cool.

Food prices also pushed higher. The food index rose 0.5% in October, with food at home up 0.4% and food away from home up 0.5%. Grocery bills kept climbing, and eating out became more expensive as well — costs households feel immediately, since food cannot be postponed.

Energy offered some relief, though only in relative terms. The energy index rose 0.7% in October, slowing sharply from a 5.2% jump in September. Gasoline rose 1.0%, after a 9.1% surge the previous month, while fuel oil increased 2.0% and electricity rose 0.9%. Energy therefore added far less to the monthly total than in September, when the gasoline spike drove the headline figure higher — though prices were still rising, not falling.

Elsewhere, the details pointed in both directions. Hospital services rose 0.8%, and transportation services also rose 0.8%. On the other side, used cars and trucks fell 1.2%, while utility (piped) gas service declined 0.8% and nonalcoholic beverages fell 0.3%.

For workers, the report carried a flat note. Real average hourly earnings — pay adjusted for inflation — were unchanged from September to October, on a seasonally adjusted basis, according to the BLS. The typical worker's inflation-adjusted pay did not grow during the month, even as prices for shelter, food and services kept rising.

Background

To understand why the missing annual rate matters, it helps to recall how the CPI is normally read. The consumer price index tracks the average change over time in the prices paid by urban consumers for a basket of goods and services. Each month, the BLS publishes two headline figures: the change from the previous month, and the change from the same month a year earlier. The monthly figure shows momentum, while the annual figure — the one most often quoted — shows how much more expensive life has become over twelve months.

September's report, published a month earlier, still carried both figures. Headline CPI rose 0.6% in September, and the 12-month rate stood at 3.7%. That annual reading showed prices in September 2026 were 3.7% higher than a year earlier. October's report breaks that pattern: because the BLS did not collect survey data for October 2025 during last year's lapse in appropriations, there is no October 2025 base, and no annual rate for October 2026 can be produced. The monthly figures are unaffected; only the year-over-year comparison is missing.

The data gap is a direct legacy of the 2025 government shutdown. During a lapse in appropriations, federal agencies suspend operations, including the price surveys that feed the CPI. The BLS has said the missing data have no impact on the personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, which uses different source data. For the CPI itself, October 2026 will stand as the month with a monthly reading but no annual one.

The report also arrives at a delicate moment for monetary policy. The Federal Reserve left its benchmark rate in the 3.75% to 4.00% range last month, and officials have been weighing whether to hold rates steady or tighten further. Inflation, as Reuters noted in its coverage, is running well above the Fed's 2% target. But a hotter-than-expected reading, with core inflation stuck at 0.3% for a third month, makes it harder to argue that inflation is on a steady path back to target.

Earlier on Tuesday, Federal Reserve Governor Christopher Waller said the central bank ought to raise short-term borrowing costs in December even if inflation had cooled, and should consider a half-point hike if the picture worsens. The CPI report, arriving hours later and stronger than forecast, added weight to that argument.

Illustration: An AI-generated illustration of the Federal Reserve building in Washington DC with a subtle interest-rate chart motif. This is an illustration, not a photograph of the real building or an actual event.

Why It Matters

The October report matters first because it disappointed hopes that inflation would cool. Economists polled by Reuters had forecast 0.3% for headline prices and 0.2% for core; both came in a tenth of a point higher — the difference between confirming a cooling trend and challenging it. Three straight months at 0.3% add up to a pace that, if sustained, would leave inflation well above the Fed's 2% target.

It matters, too, because of where the pressure is coming from. Shelter, the largest single component of household spending, accounted for more than 30% of the month's increase, according to the BLS. Food rose 0.5%, with both groceries and restaurant meals more expensive. These weekly costs shape how people experience inflation far more than index levels do. When rent and food keep rising while real average hourly earnings stand still, as they did in October, living standards are squeezed — with lower-income households feeling it most.

For the Federal Reserve, the report complicates the path ahead. With inflation running well above the 2% target, officials must decide whether to raise rates again in December or wait for more evidence. Governor Waller's call earlier on Tuesday for a December rise — and a possible half-point move if the picture worsens — gained fresh support from the hotter-than-forecast data.

Financial markets reacted swiftly. Nasdaq futures fell 1.4% and S&P 500 futures were down 0.8%, according to Reuters. In the bond market, US two-year yields rose 13 basis points to 4.68%, while the benchmark 10-year yield rose 7.6 basis points to 4.94%. The dollar index rose 0.3% to 102.05, and gold fell 2% to $4,057 an ounce. Higher expected rates tend to weigh on shares and gold, lift yields and support the dollar — and all four happened within hours.

Traders' expectations for the Fed's next moves shifted decisively. Traders fully priced in a 25-basis-point December hike and two such hikes by March, according to LSEG data reported by Reuters and Devdiscourse. XTB, the brokerage, put the December odds at 86% for a 25-basis-point increase and 13% for a 50-basis-point increase. Markets now see a December increase as the base case, with a half-point move a real, if less likely, possibility.

The missing annual rate adds a further layer of uncertainty. Without a year-over-year figure, the public must lean on the monthly figures and the September annual reading of 3.7%. The monthly numbers are sound, but the report is harder to summarise in a single figure — a reminder of how last year's shutdown still ripples through economic statistics.

What Happens Next

Attention now turns to the Federal Reserve's December meeting, where the decision on interest rates will be made. Governor Waller set out one clear position: raise borrowing costs in December, and be ready to go bigger, with a half-point increase, if the picture worsens. Whether a majority shares that view will emerge in the coming weeks, though the Fed will also weigh employment, growth and financial conditions.

The next CPI report will also be watched closely. The November data are due on December 10, 2026, according to Reuters, and that report will restore the annual comparison, since the BLS did collect November 2025 data. Until then, the September reading of 3.7% remains the latest annual figure. A softer November reading could reopen the debate about holding steady; another firm one would reinforce the case for December action.

Illustration: An AI-generated illustration of stock market screens reacting to an inflation report, with falling charts on a trading floor. This is an illustration, not a photograph of a real trading session.

Markets, meanwhile, will keep repricing the outlook with each new piece of data. Traders have fully priced in a 25-basis-point December hike and two such hikes by March, on LSEG data, and any surprise in the November CPI report could shift those odds quickly.

For households, the practical question is simpler: when will the monthly increases in shelter and food begin to ease? October offered no clear answer. Shelter and food kept rising, and real earnings were flat. Until those costs slow, inflation will remain a story of steadily rising bills. The December 10 report will show whether that pattern is finally changing — and whether the Fed decides to act first.

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FAQ

Why was there no annual inflation rate in the October 2026 CPI report?

The BLS did not publish a 12-month inflation rate for October 2026 because it did not collect survey data for October 2025, during last year's lapse in appropriations — the 2025 government shutdown. Without an October 2025 base, an annual rate cannot be calculated. The monthly figures are unaffected, and the last annual reading, for September, was 3.7%.

How does the October report differ from the September CPI report?

September's report carried both figures: headline CPI rose 0.6% on the month, and the 12-month rate was 3.7%. October's report has only the monthly figures, because the October 2025 comparison base does not exist. October's monthly rise was smaller than September's 0.6%, partly because energy slowed from +5.2% to +0.7%, but it still beat the 0.3% forecast.

What drove the October increase?

Shelter was the biggest driver, rising 0.3% and accounting for more than 30% of the monthly all-items increase, according to the BLS. Food rose 0.5%, with food at home up 0.4% and food away from home up 0.5%. Energy rose 0.7%, with gasoline up 1.0%, fuel oil up 2.0% and electricity up 0.9%. Hospital services and transportation services each rose 0.8%. Used cars and trucks fell 1.2%, utility gas service fell 0.8% and nonalcoholic beverages fell 0.3%.

What does the report mean for the Federal Reserve's December decision?

It strengthens the case for a rise: inflation is running well above the Fed's 2% target, and the report beat forecasts. Fed Governor Christopher Waller said earlier on Tuesday that the Fed ought to raise borrowing costs in December even if inflation cooled, and should consider a half-point hike if the picture worsens. Traders fully priced in a 25-basis-point December hike and two such hikes by March, according to LSEG data. XTB put the December odds at 86% for 25 basis points and 13% for 50 basis points.

When is the next CPI report, and will it have an annual rate?

The next CPI report, covering November data, is due December 10, 2026, according to Reuters. It should restore the annual comparison, because the BLS did collect November 2025 data. The missing October 2025 data have no impact on PCE price index readings, the Fed's preferred inflation gauge.

Sources

• Reuters — US consumer prices rise more than expected in October; BLS October 2026 CPI report and market reaction (Nasdaq and S&P 500 futures, bond yields, dollar and gold moves; inflation running well above the Fed's 2% target; next CPI report due December 10, 2026). reuters.com/markets
• US Bureau of Labor Statistics — Consumer Price Index news release, October 2026 (headline CPI +0.4%, core CPI +0.3%, shelter +0.3% accounting for more than 30% of the monthly increase, food +0.5%, energy +0.7%, real average hourly earnings unchanged; no 12-month rate published because October 2025 survey data were not collected during the 2025 lapse in appropriations). bls.gov — CPI news release
• Reuters / LSEG data, via Devdiscourse — Traders fully priced in a 25-basis-point December rate hike and fully priced two 25-basis-point hikes by March. devdiscourse.com
• XTB — December rate odds at 86% for a 25-basis-point hike and 13% for a 50-basis-point hike. xtb.com
• Reuters — Federal Reserve Governor Christopher Waller's remarks on Tuesday 10 November 2026 that the central bank ought to raise short-term borrowing costs in December and should consider an upsized half-point hike if the inflation picture worsens; the Federal Reserve left its benchmark rate in the 3.75%–4.00% range last month. reuters.com/markets