US inflation rose faster than expected for the third consecutive month in October, adding pressure on the Federal Reserve to deliver another interest-rate increase at its December meeting and rattling risk assets from Bitcoin to tech stocks.
The consumer price index rose 0.4% in October, the Bureau of Labor Statistics reported Tuesday, above the 0.3% economists had forecast. Core CPI, which strips out volatile food and energy prices, climbed 0.3%, also exceeding expectations of 0.2% and matching September's reading for the third month running.
Headline inflation slowed from September's 0.6% monthly surge, but remains above the Fed's 2% target. The bureau did not report a year-on-year figure because the 2025 federal government shutdown prevented data collection in October of that year. The last available annual headline reading, for the 12 months to September, stood at 3.7%.
Mark Zandi said housing was the largest contributor, with the shelter index rising 0.3% and accounting for more than 30% of the monthly increase. Food prices accelerated 0.5%, pushed higher by gains in snacks, beef, and meats, poultry, fish and eggs. Energy rose 0.7%, a sharp deceleration from September's 5.2% jump, but gasoline prices still climbed 1%. Other notable increases included transportation services (0.8%), recreation (0.8%), motor vehicle insurance (0.7%) and medical care (0.3%).
Fed Governor Christopher Waller, speaking in London ahead of the release, said he favoured a quarter-point rate increase in December even if inflation cooled, and that another core CPI reading of 0.3% could justify a larger move. “I believe a 50 basis point hike in the policy rate should be considered at the December meeting,” he said. October's core reading hit exactly that threshold.
Market pricing shifted quickly. According to CME Group’s FedWatch Tool, traders put odds of a quarter-point hike at 85.3% and a half-point hike at 14.7%; odds of a half-point move had been near zero before the report. The Fed’s benchmark rate currently sits at 3.75%-4%; a half-point move would lift it to 4.25%-4.50%.
Dallas Fed President Lorie Logan said after the release that she sees a need for two additional quarter-point increases, warning that the Fed’s preferred inflation gauge, the personal consumption expenditures price index, could also move higher when reported later this month. “It may be possible to move more rapidly this winter than the committee has moved so far this fall,” she said.
Bitcoin briefly dropped to around $73,525 after the data, near its lowest level since August, before recovering toward $74,000 but remaining roughly 1% lower over 24 hours. About $178 million in leveraged crypto long positions were liquidated within an hour of the announcement. Ethereum slipped toward $2,040 and major altcoins also faced selling pressure. US spot Bitcoin ETFs recorded $201 million in net withdrawals on Monday.
Bond markets reacted sharply, with the two-year Treasury yield posting its biggest increase since April 2025. The dollar strengthened and US stocks opened lower; the tech-heavy Nasdaq Composite fell 0.6% before recouping some losses. Nvidia stock dropped nearly 4% amid a board investigation into whether CEO Jensen Huang was targeted by a foreign intelligence effort.
Economists pointed to multiple drivers behind the persistent inflation. The Iran war has pushed crude oil prices above $100 a barrel, raising gasoline, diesel and jet-fuel costs. President Donald Trump’s tariffs have also had an impact on inflation, according to research from the Federal Reserve Bank of New York, which found that every percentage-point increase in average tariffs led to nearly a 0.25% price increase for consumer goods after one year. The buildout of artificial-intelligence data centres has also driven up electricity prices and created shortages of memory chips used in consumer electronics, economists said.
“Core inflation today reflects three outsized shocks: tariffs, energy prices, and AI-related demand,” Josh Hirt, senior US economist at Vanguard Group, wrote Tuesday.
The Fed’s next policy meeting is scheduled for December 8-9. The next CPI report will arrive on December 10, meaning policymakers will make their December rate decision without seeing November’s consumer inflation figures.
Analysis
Why This Matters
- A third consecutive month of above-forecast inflation erodes confidence that the Fed is winning its price-stability fight and raises the risk of larger rate increases.
- Higher borrowing costs ripple through mortgages, credit cards and business loans, while making risk assets such as Bitcoin and growth stocks less attractive.
- The prolonged period of elevated inflation, above the Fed’s 2% target for more than five years, continues to squeeze household budgets, particularly for food, housing and energy.
Background
Inflation began surging in 2021 as post-pandemic demand collided with supply-chain disruptions, then accelerated further after Russia’s 2022 invasion of Ukraine drove oil prices above $100 a barrel. The Fed responded with aggressive rate rises, hiking its benchmark from near zero to over 5% by mid-2023. Inflation moderated through much of 2024 but re-accelerated in 2025 and 2026 as the Iran war pushed energy costs up again and President Trump’s tariffs added to consumer prices. The government shutdown of October–November 2025 interrupted the Bureau of Labor Statistics’ data collection, leaving economists without a year-on-year CPI comparison for this report.
Key Perspectives
- Mark Zandi, chief economist at Moody’s: Described the October figure as “uncomfortably high” and said it “certainly makes it more likely we get another rate increase in December.”
- Jason Pride, chief of investment strategy at Glenmede: Wrote that “Investors do not need year-over-year figures to see that this was a hot inflation report.” He added: “It would have taken exceptional evidence of disinflation to dissuade the Fed from raising rates in December, and this report delivered the opposite.”
- Robin Brooks, economist: Described the CPI result as “discouraging” and noted that October was “the peak of the second big oil price shock this year.”
- Karen Manna, fixed income strategist at Federated Hermes: Said the report “raises fresh questions about whether the Fed has done enough to contain price pressures and reinforces the risk that interest rates need to move higher and stay there for longer.”
- Mosaic Asset Company: Noted that “Consumer inflation has continued running above target while the October jobs report removed any concerns about a slowdown in the labor market.” The firm also observed signs of “extreme” sell-side pressure on the Nasdaq, potentially indicating the index had formed a long-term bottom.
What to Watch
- The Fed’s December 8-9 meeting, where a rate increase, possibly of 50 basis points, is now widely priced in.
- The November CPI report due December 10, which will arrive after the Fed’s decision, meaning policymakers must act without the latest monthly inflation data.
- Whether diesel price increases, which have a slow pass-through to broader CPI categories, push inflation higher over the next three to six months as economists expect.
Checked
11 claims in this story checked against 5 sources: 10 supported.
Show each claim
- SupportedUS inflation exceeded forecasts for the third consecutive month in October.Sydney Morning Herald - Latest News: “It now appears inevitable that the Fed will deliver its second rate rise in this cycle – the first was in September – after the US inflation rate came in above expectations for the third successive month.”
- SupportedThe October inflation report fuelled market bets on a December rate hike.Cointelegraph.com News: “Following the CPI report, those odds turned more hawkish, with a 25-basis-point hike attracting 85.3% odds and a 50-basis-point hike attracting 14.7%.”
- SupportedHeadline CPI rose 0.4% in October, above economists’ 0.3% forecast.Economy: “The consumer price index, a broad gauge of costs across the U.S. economy, increased a seasonally adjusted 0.4% for the month, the Bureau of Labor Statistics reported Tuesday. Economists surveyed by Dow Jones had been looking for a 0.3% increase.”
- SupportedCore CPI rose 0.3%, above the 0.2% forecast and matching the reading for the third consecutive month.Decrypt: “Core CPI, which strips out food and energy prices, climbed 0.3% against expectations of 0.2%, matching September's reading for the third consecutive month.”
- Partly supportedHeadline inflation slowed from September’s 0.6% monthly increase but remained above the Fed’s 2% target.BBC News: “For the 12 months to September, inflation was 3.7%.”
- SupportedWaller said, “I believe a 50 basis point hike in the policy rate should be considered at the December meeting.”Decrypt: ““I believe a 50 basis point hike in the policy rate should be considered at the December meeting,” he said.”
- SupportedAfter the report, markets priced a 85.3% chance of a quarter-point hike and a 14.7% chance of a half-point hike.Cointelegraph.com News: “Following the CPI report, those odds turned more hawkish, with a 25-basis-point hike attracting 85.3% odds and a 50-basis-point hike attracting 14.7%.”
- SupportedLogan said she saw a need for two additional quarter-point increases and that the Fed might move more rapidly this winter.Economy: “Dallas Fed President Lorie Logan, speaking Tuesday after the inflation report, said she sees a need for two additional quarter-point increases.”
- SupportedBitcoin briefly fell to around $73,525 after the inflation data.Decrypt: “Bitcoin was trading near $74,200 before the announcement and briefly dropped to approximately $73,525 immediately afterward.”
- SupportedAbout $178 million in leveraged crypto long positions were liquidated within an hour of the announcement.Decrypt: “Approximately $178 million in crypto long positions were liquidated within an hour of the announcement.”
- SupportedThe two-year Treasury yield had its biggest increase since April 2025.Decrypt: “The two-year Treasury yield, which closely tracks expectations for Fed policy, posted its biggest increase since April 2025”
