The Consumer Price Index rose 0.4% on a monthly basis in October, after seasonal adjustment, the Bureau of Labor Statistics reported Tuesday. That was down from 0.6% in September but above the 0.3% economists expected, according to the report.
Mark Zandi, chief economist at Moody's, said the reading was "uncomfortably high." He said the Federal Reserve "is not going to be happy about it" and that it makes another rate increase in December more likely.
Core CPI, which excludes food and energy, rose 0.3% in October, as it did in September and August. Zandi said a consistent monthly core reading around 0.2% would be more in line with the Fed's 2% annual inflation target.
The shelter index rose 0.3% in October and accounted for over 30% of the CPI increase, according to the Bureau of Labor Statistics. Zandi said he does not expect that pace to persist because it is not consistent with market rent trends.
Gasoline prices rose 1% in October, after a 9.1% increase in September. Food prices rose 0.5%, after an unchanged reading in September. Airfares climbed 0.4% in October, following monthly increases of 1.2%, 2.7% and 3.8% in the preceding months.
Thomas Ryan, senior North America economist at Capital Economics, said diesel prices pass through slowly to the broader CPI because they affect transportation costs. He said he expects inflationary pressure for at least the next three to six months.
Josh Hirt, senior U.S. economist at Vanguard Group, wrote that core inflation reflects tariffs, energy prices and AI-related demand. Economists said data center buildout has raised electricity and consumer electronics prices, and Ryan said it has contributed to a shortage of memory chips.
The Bureau of Labor Statistics did not report an annual inflation figure in the latest report because of the federal government shutdown that ran from Oct. 1 to Nov. 12 a year earlier.