WASHINGTON, November 11, 2026 – Rising costs of grocery shopping, rents, and hotel stays have led to inflation in consumer prices in the United States being much higher than what experts expected in October, thus adding more pressure on the Federal Reserve to consider raising interest rates once again. According to the Labor Department’s Bureau of Labor Statistics report on Tuesday, the Consumer Price Index has risen 0.4% in comparison to September.
It’s the third consecutive month when consumer prices increased at least by 0.4%. In September, it was 0.6%, thus, in October it was indeed slower, but not what families who hope to pay less for groceries would be happy about.
Why the report matters
This is the first snapshot of inflation after last week’s mid-term election, coming at an untimely political juncture. The rising cost of living helped Democrats win many seats in the U.S. Congress and Senate, as Reuters notes, whereas the statistics further cement the case for the Fed to raise its interest rate again.
The typical statistic of price increase over the last twelve months was not reported. Due to a federal government shutdown, the Bureau of Labor Statistics failed to compile the consumer price index data for October 2025 and could not have a good basis for comparison.
Economic forecasters made their estimates on that account. The year-on-year growth of prices in October was estimated at 3.9% – 4.0%, having increased from 3.7% in September; the annual core inflation (excluding food and energy) was estimated at 2.8%.
What got more expensive
Shelter caused most of the pain. Housing costs increased 0.3% in October and made up more than 30% of the total monthly increase.
Another culprit was food. Food prices moved up 0.4%, beef prices 0.9%, egg prices and fruit/vegetable prices both by 0.6%, dairy prices 0.6%, and snack foods prices went up 1.0%. Dining out was not any better: the index for food away from home increased 0.5%, and full-service restaurant meals increased 0.7%.
And there was also the cost of energy. Energy prices increased 0.7% in total; gasoline prices increased 1.0%, following a 9.1% increase in September. Diesel prices, which make up a quiet part of transport costs, increased 2.7%, following a 11.9% increase in September.
The Fed’s dilemma
Excluding volatile prices for food and energy, Core CPI increased by 0.3% in October, marking the third consecutive month of increases in this rate and beating analysts’ expectations of 0.2%.
This is important as the Fed cannot simply point the finger at gasoline prices anymore. Inflation in services persists, with owners’ equivalent rent up by 0.3%, hotel and motel prices up by 0.6%, airline tickets up by 0.4%, recreation services up by 0.9%, and motor-vehicle insurance up by 0.7%.
Chris Waller, the Fed governor, stated that the central bank should increase interest rates in December and that “a stronger policy move may be necessary.” He even mentioned the probability of a 50-basis-point increase.
It seems that the financial markets share this view, as according to CME Group’s FedWatch Tool, the chances for a 25-basis-point rate hike in December stood at approximately 89%.
Tariffs and AI spending
The increase in every price is not necessarily due to fuel. The impact of tariffs appeared in household furniture and supplies, whose prices recovered 0.7%, and toys, which increased by 1.8%. Phone prices recorded an unprecedented increase of 1.4%, while computer and peripheral prices increased due to the high amount of investment being made in AI.
One area where there was some relief was in used cars and trucks, whose prices decreased by 1.2%. Insurance prices were down 1.8%, but this was due to an adjustment in methodology done by the BLS.
“Inflation isn’t dead; it is very much alive, and the cost-of-living crisis rages on,” said Christopher Rupkey, chief economist at FWDBONDS.
What happens next
Consumers could see some relief from rising fuel costs. The price of crude oil has dropped by at least 10% in November thus far, with the nationwide price of gas dropping below $4 per gallon as of Monday.
But any relief at the pump will not make the problem of rising rent, food, or even insurance premiums go away. Given that inflation is well above the Fed’s target of 2% while job creation is proving surprisingly resilient in October (with 165,000 jobs added), the Fed now faces a dilemma.
For now, the October report suggests the latter option is losing support.
