October inflation went up – but within expectations

Inflation ticked up in October but held close to Wall Street's predictions, the Bureau of Labor Statistics reported on Wednesday. The consumer price index (CPI), which tracks the cost of a broad range of goods and services, climbed 0.2% for the month, bringing the annual inflation rate to 2.6%, a modest increase from September’s 2.4%.

Core inflation, which excludes the volatile food and energy sectors, rose 0.3% for the month and registered a 3.3% year-over-year increase, also matching analyst expectations.

Medical care services were up 0.4%, while medical care commodities dropped 0.2% for the month. Energy costs, which had been falling in prior months, stabilized in October, with no monthly increase, while food prices rose 0.2%. Compared to a year ago, energy prices have dropped by 4.9%, and food costs have risen by 2.1%.

Housing costs, however, continued to drive inflation. The shelter index, which constitutes about one-third of the broader CPI, rose 0.4% in October, double the previous month’s gain. Annually, shelter prices are up 4.9%, accounting for more than half of the all-items CPI increase.

Other notable price changes included a 2.7% rise in used vehicle costs, a 3.2% jump in airline fares, and a 6.4% drop in egg prices, although eggs remain significantly higher, up 30.4% year-over-year.

Inflation-adjusted average hourly earnings saw a slight increase of 0.1% in October, amounting to a 1.4% rise over the past year. This modest wage growth suggests that while inflation has eased since its peak in 2022, price pressures still weigh on American households.

Experts say the latest inflation data adds complexity to the Federal Reserve’s strategy as it aims for a 2% inflation target. Although the Fed has cut its benchmark rate by 0.75 percentage point in recent months, analysts expect additional cuts may be less aggressive under the new Trump administration.

President-elect Donald Trump has proposed increased tariffs and government spending, which could stimulate economic growth but also heighten inflation risks.