Monthly US inflation eased less than expected in October

Consumer prices in October continued to climb at a faster rate than economists had anticipated, providing little respite to Americans wrestling with soaring living expenses, according to a report from the Consumer Price Index. The Labor Department's data, released on Tuesday, indicated that the CPI rose by 0.4% on a monthly basis, slightly lower than the 0.6% increase seen in September.

However, this monthly gain surpassed the 0.3% expectation among economists surveyed by FactSet. The report, which is one of the earliest economic indicators following the midterm elections, highlighted persistent inflation despite a minor cooling from the previous month. Andrew Davis, head of investment strategy at Bryn Mawr Trust, noted that while headline inflation had eased from September, core prices still increased by 0.3% for the third consecutive month, suggesting that underlying inflation pressures remain unresolved.

Energy costs, driven largely by the ongoing Iran conflict, contributed significantly to the inflation surge in October, though their impact was less pronounced compared to previous months. Shelter costs, which surged by 0.3% in October, accounted for over a third of the all-items price increase, while food prices also accelerated, rising by 0.5% month-over-month after staying flat in September.

Energy costs, buoyed by surging global oil prices, contributed only a modest 0.7% to the overall inflation jump. As a result, core inflation, which excludes volatile energy and food prices, rose by 0.3% in October, matching September's pace but slightly exceeding the expectations of economists. Josh Hirt, Vanguard's senior U.S. economist, expressed disappointment, stating that elevated energy prices have led to a prolonged shock that is passing through to core inflation, prompting the company to raise its core inflation forecast for the end of 2026 to 3.2%.