Inflation rose 0.4% month-over-month in October, down slightly from September's print of 0.6%. The headline figure for the Consumer Price Index (CPI) was also above economist estimates of 0.3%. Note: The BLS did not provide annual figures for October due to last year's government shutdown.
On a "core basis," which excludes volatile food and energy prices, prices rose 0.3% month-over-month. That was slightly above estimates of 0.2%.
Key Takeaways
- Headline inflation rose 0.4% month-over-month, while core inflation rose to 0.3% in October.
- The index for energy increased 0.7% over the month following a 5.2% increase in September.
- Current market expectations show an 88% chance of a 25 basis-point hike at the next Fed meeting versus a 12% chance of a 50 basis-point hike.
Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in October after rising 0.6 percent in September, the U.S. Bureau of Labor Statistics reported today.
The index for shelter rose 0.3 percent in October, accounting for over thirty percent of the monthly all items increase. The food index increased 0.5 percent in October, as the food at home index rose 0.4 percent and the food away from home index increased 0.5 percent. The index for energy increased 0.7 percent over the month following a 5.2-percent increase in September.
The index for all items less food and energy rose 0.3 percent in October, as it did in September and August. Indexes that increased over the month include recreation, medical care, motor vehicle insurance, household furnishings and operations, and education. Conversely, the index for used cars and trucks and the index for communication were among the small number
of major indexes that decreased in October.
The first chart is an overlay of headline CPI and core CPI since the turn of the century. The highlighted two percent level is the Federal Reserve's target inflation rate. In October, headline prices rose 0.4% on a monthly basis, below September's reading of 0.6%. Meanwhile, core price pressures climbed from 0.2% in September to 0.3% in October.
The next chart shows both series since 1957, the year the government first began tracking core inflation.
Consumer Price Index Components
The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each, which is shown in the chart below. The BLS weighs these annually with the latest weighting taking place in December 2025.
The following table shows the annualized change in Headline and Core CPI (not seasonally adjusted) for each of the past six months. It includes the eight primary components and a separate entry for Energy, a collection of sub-indexes within Housing and Transportation. These breakdowns help illustrate how inflation impacts personal expenses based on individual exposure. For instance, the current volatility in energy and gasoline is clearly reflected in the Transportation component. Note: No annual figures were provided due to 2025 government shutdown.
Here is the same table as above with month-over-month numbers (not seasonally adjusted).
Note: For additional information on the component composition of the Consumer Price Index, see our Inside the Consumer Price Index.
Inflation: Fed's 2% Target
The Fed is on record as having a target rate of 2% for core inflation. While the Fed traditionally uses the PCE Price Index as their preferred inflation gauge, the Consumer Price Index remains the most widely recognized measure. You can read our full analysis on how these two inflationary measures compare.
The Federal Reserve concluded its seventh meeting of the year by maintaining the federal funds rate at 3.75%–4%. The decision, which markets had largely priced in, comes after the benchmark rate increase since 2023.
In a statement, the Committee noted, "Inflation remains elevated relative to the Committee's 2 percent goal," but stated that they will "deliver price stability."
The Fed will meet again in December where they are expected to raise rates by at least 25 basis points. At the time of writing, the CMEFedWatch Tool shows an 88% likelihood the Fed will implement a quarter-point hike, versus a 12% likelihood of a 50 basis-point increase.
