US consumer prices expected to have risen at slower pace in October

By Lucia Mutikani

WASHINGTON, Nov 10 (Reuters) – US consumer prices likely increased at a moderate pace in October, but inflation probably remained stubbornly high, leaving the Federal Reserve on course to raise interest rates next month.

The anticipated slowdown in the Consumer Price Index would largely reflect a retreat in gasoline prices. The Labor Department’s Bureau of Labor Statistics will not publish year-over-year inflation readings when it releases the report on Tuesday because last year’s federal government shutdown prevented the collection of consumer price data in October 2025, leaving no comparison base.

Annual consumer inflation jumped 3.7% in September, and economists said they had no reason to expect it to have cooled in October even if the pace of increase slowed over the month. Inflation is running well above the US central bank’s 2% target.

The US-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.

“What you will see in the data is further evidence of stubborn and sticky inflation, especially in the service sector,” said Joseph Brusuelas, chief economist at RSM. “That will result in a December rate hike, and I do not expect the October CPI data to dislodge the Fed from that monetary path.”

The CPI likely increased 0.3% last month after accelerating by 0.6% in September, a Reuters survey of economists predicted.

Though oil prices rose over the month, retail gasoline prices fell 0.9% from September, before adjustment for seasonal fluctuations, data from the US Energy Information Administration showed. Economists anticipated a small increase in gasoline prices in the CPI report after the seasonal adjustment. That move would follow a 9.1% surge in September. Food prices are also expected to have risen after being unchanged in September.

TAME CORE CPI ANTICIPATED

Excluding the volatile food and energy components, the CPI is forecast to have increased 0.2% after gaining 0.3% in September. The so-called core CPI was likely restrained last month by a deceleration or even decline in the cost of airfares. But prices for hotel and motel rooms probably remained high, as did owners’ equivalent rent, a measure of the amount homeowners would pay to rent or would earn from renting their property.

The BLS will update the data used to calculate the health insurance components, which some economists expected would result in subdued readings. An artificial intelligence investment boom is expected to keep prices for information technology goods higher.

In the absence of last year’s inflation data, some economists used the average index for September and November 2025 to estimate the year-over-year rate of change for the October CPI. Others used interpolated levels from independent sources.

Their estimates for the October CPI converged at a 3.9% year-over-year increase. Core CPI inflation was projected to have increased 2.7% in the 12 months through October after advancing 2.6% in September.

The missing data from last year have no impact on the calculation of the Personal Consumption Expenditures Price Index readings that are tracked by the Fed to gauge progress toward its inflation target. Both measures are running above 3%.

Late on Monday, financial markets were pricing in a roughly 85% chance of a rate hike next month. The Fed left its benchmark overnight interest rate in the 3.75%-4.00% range last month.

“The main risk for Fed officials not following through on a December rate hike would be a further substantial correction in equity markets or widening credit spreads,” said Veronica Clark, an economist at Citigroup.

US stocks slumped last week after the Democrats’ sweeping victory fanned fears that new regulations could dent the durability of the AI trade. Stocks rallied on Monday as oil prices fell.

(Reporting by Lucia Mutikani; Editing by Paul Simao)