What happened
The Department of Labor reported that the Consumer Price Index increased 0.4 percent in October, a slowdown from September’s 0.6 percent rise largely because energy price increases moderated. Gasoline prices rose just one percent after jumping 9.1 percent the previous month.
Beneath the headline, however, price pressures broadened across the economy. An analysis of 119 detailed consumer categories found that 56.3 percent experienced price increases exceeding a three percent annualized rate from August through October, up from 42 percent from May through July. The number of categories with inflation above five percent doubled from 26 to 52.
At the same time, deflationary pressure narrowed sharply. Only 38 of 141 categories recorded falling prices in October, down from 61 in March. The share of categories with declining prices fell from 43 percent to 27 percent.
Core inflation, which excludes food and energy, rose 0.3 percent for the third consecutive month, translating to an annualized rate of roughly 3.7 percent. Services inflation excluding housing accelerated to 0.5 percent from 0.3 percent in September. Grocery prices rose 0.4 percent after a slight September decline, and restaurant prices increased 0.5 percent.
Federal Reserve Governor Christopher Waller said hours before the report that a half-percentage-point rate increase should be considered if October core CPI rose around 0.3 percent or more. The report met that threshold exactly.
