U.S. Inflation Rises 0.4% in October, More Than Expected; Odds Grow of a Fed “Jumbo” Hike in December

[Financial News] U.S. consumer prices rose more than expected in October, increasing the likelihood that the Federal Reserve System (Fed) will deliver a substantial rate hike at its final meeting of the year in December.
The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) said on the 10th, local time, that the Consumer Price Index (CPI) rose 0.4% in October from the previous month. That was slower than the 0.6% increase in the previous month but higher than economists’ forecast of 0.3%. Core CPI, which excludes volatile energy and food prices, also rose 0.3% from the previous month, exceeding the market forecast of 0.2%. Core CPI has risen 0.3% for three consecutive months since August.
Housing costs and food drove the October increase in prices. The shelter index, which accounts for a large share of the CPI’s overall weighting, rose 0.3% from the previous month, contributing more than 30% of the total increase in prices. The food index also turned from no change in the previous month to a 0.5% increase. Energy, by contrast, rose just 0.7% in October after surging 5.2% in September, while used cars and trucks fell 1.2%.
The October report did not include the “year-over-year rate of increase.” There was no comparison base because price data for October 2025 could not be collected due to last year’s federal government shutdown. However, local media, including The New York Times (NYT), estimated the annual inflation rate for October this year at around 4.0%, based on September’s 3.7% rate and November data.
That is twice the Fed’s 2% inflation target. Analysts say underlying price pressures have not eased, as oil prices have surged following the outbreak of the Iran war and the Trump administration’s import tariff policy has added to the pressure. The recently released October employment figures—165,000 net jobs added and an unemployment rate of 4.1%—were also strong, adding to inflationary pressures.
Markets reacted immediately to the stronger-than-expected inflation data. According to the Chicago Mercantile Exchange’s (CME) FedWatch Tool, rate futures markets have priced in a 100% probability of a Fed rate hike in December. The probability of an increase of at least 0.25 percentage points from the current 3.75%–4.00% range is overwhelming, and some market participants have also newly priced in a 14.7% probability of a 0.5-percentage-point hike (a “jumbo” hike), up from 0% as of the previous day.


[email protected] Park Ji-hyun Reporter