October US core CPI rises 0.3%, exceeding forecasts

• The prior monthly core CPI change was also plus 0.3%.
• On an unrounded basis, core came in at an increase of 0.297%.
• The year-over-year core CPI figure was not published; it was previously 2.6%.
• The unrounded annual core rate also went unpublished, compared with 2.564% before.
• Headline CPI month-to-month advanced 0.4%, against a 0.3% forecast (the earlier number was 0.6%).
• The yearly headline CPI figure was not published; the previous reading was 3.7%.
• The unrounded number was not published either, versus a prior 3.738%.
• Core goods gained 0.2% month-over-month, slowing from 0.3%.
• Real weekly earnings showed no change, having been revised to -0.4% from -0.5% previously.
• Supercore was roughly 0.4% on the month, with just over half of that coming from services excluding energy services.

The main sub-components broke down as follows:

• Owners' equivalent rent: plus 0.3%, matching the prior month.
• Rent of primary residence: plus 0.2%, also matching the previous figure.
• Motor vehicle insurance: plus 0.7%, compared with +0.1% earlier.
• Airfares: plus 0.4%, easing from 1.2%.
• Used cars: minus 1.2%, reversing a +0.7% prior gain.
• Apparel: plus 0.1%, slowing from 0.3%.
• Medical care: plus 0.3%, accelerating from 0.1%.
• Lodging away from home: plus 0.6%, down from 2.0%.
• Energy month-over-month: plus 0.7%, well below the prior 5.2%.
• Gasoline month-over-month: plus 1.0%, sharply lower than the previous 9.1%.
• Food month-over-month: plus 0.5%, following a flat prior reading.
• New vehicles: plus 0.2%, consistent with the earlier month.

The Bureau of Labor Statistics was unable to gather October 2025 survey data, a consequence of the appropriations lapse during the government shutdown, which makes many of the metrics incalculable.

A calculation that adds up the BLS category contributions (food 0.064, energy 0.053, core 0.234) results in roughly 0.35% unrounded, suggesting the headline print is slightly more favorable than the underlying details imply.

Markets had already fully priced in a December rate increase after Waller's hawkish remarks, baking in 60 basis points of tightening over the coming year. Ahead of the release, USD/JPY traded at 158.19; following it, the pair went to 158.44. S&P 500 futures, initially flat, fell 0.7% after the numbers came out. US two-year yields rose 9 bps before the data, adding to a 13 bps gain after.

Waller warned that a half-point increase might be warranted in December if the core CPI reading came in "around 0.3% or higher", placing elevated significance on the day's figures. He added that he would support a quarter-point rate hike in December even if October CPI improved compared to September. He cited particular concern over how widespread price increases had become.

That breadth is reflected in a supercore reading of 0.4%. The BLS wrote that used cars and communications were "among the small number of major indexes that decreased." Core goods excluding used cars advanced 0.4%, and core excluding shelter and used cars also posted a 0.4% gain, each representing the largest since January. Used car prices declined 1.2% month on month in October; without that drop, the report would have landed at a troublesome 0.4% across the main indicators rather than 0.3%.

Furnishings and supplies recorded a 0.7% advance, their sharpest since June 2025. Furniture saw a 1.2% increase, appliances 1.3%, tools and hardware 1.4%, and housekeeping supplies 0.9% (the fastest since January 2023). Transportation services gained 0.8%, their best since January. Insurance costs rose 0.7%, maintenance and repair 0.6%, and public transportation 2.0%.

For context, the Consumer Price Index from the US Bureau of Labor Statistics is widely regarded as the world's most market-moving inflation report. It is released each month at 8:30 am ET, generally during the second week of the month that follows, and it tracks changes in what urban consumers spend on a basket of items that include food, energy, shelter, vehicles, apparel, medical care, transportation, and recreation.

In contrast to Canada, where the unadjusted annual rate is the primary focus, US markets fixate on the seasonally adjusted monthly change, especially in core CPI, which leaves out food and energy. Traders frequently compute unrounded figures from the index levels, as the gap between a 0.24% and a 0.26% monthly gain can determine whether the published figure rounds up or down, and thus how markets respond.

Shelter is the biggest component, making up about one-third of the total index. It is largely driven by owners' equivalent rent—an estimate of what homeowners might pay to rent their own properties—alongside primary residence rent. Since shelter is measured using leases that turn over gradually, it lags current market rents by several months.

Markets also keep an eye on supercore inflation, defined as core services ex-housing, which is viewed as the best measure of wage-led price pressures. Unpredictable components like airfares, used cars, motor vehicle insurance, and lodging away from home often produce surprises.

The Federal Reserve aims for 2% inflation on the PCE price index rather than the CPI, yet the CPI is published first and several of its parts flow directly into the PCE. Together with the PPI, it allows economists to approximate core PCE ahead of its official publication. A surprise in core CPI can move Treasury yields, the US dollar, and equities substantially, while altering rate expectations in advance of the next FOMC meeting.