Consumer Price Index Rises 0.4% in October, Topping Expectations
By TopHolding Editorial · Monday, November 9, 2026 at 7:00 PM
October CPI rose 0.4%, bringing annual inflation to 4.1%. First Trust economists report the data likely cements a December Fed rate hike, though future increases may be fewer than priced.
According to Nate Gerze, Economist, Brian S. Wesbury, Chief Economist, and Robert Stein, Deputy Chief Economist at First Trust Portfolios, stronger-than-expected inflation in October is "likely cementing another rate hike from the Federal Reserve in December." The Consumer Price Index climbed 0.4% during the month, topping the consensus forecast of 0.3% and lifting the annual inflation rate to 4.1%. Core CPI, which excludes food and energy, rose 0.3% in October against expectations of 0.2%, bringing its twelve-month advance to 2.8%.
Energy costs advanced 0.7% on the month and stand 21.5% higher than a year earlier, while food prices gained 0.5% in October to sit 3.0% higher over the year. Real average hourly earnings were unchanged on the month and down 0.8% from a year ago. The First Trust economics team highlights that housing rents climbed 0.3% for the second consecutive month, noting that this stalled earlier progress toward slower rent inflation and accounted for about 30% of October's headline CPI increase. Additional monthly upward pressure emerged from intracity transportation, which surged 6.6%, hospital services, which rose 0.8%, and motor vehicle insurance, up 0.7%, while used vehicle prices declined 1.2%.
First Trust's economists observe that October represents the 67th straight month in which both headline and core inflation have remained above the central bank's 2.0% objective. While the authors expect the Federal Open Market Committee to lift interest rates again in December, they project that subsequent policy increases will prove fewer than financial markets currently anticipate. The report contends that higher borrowing costs directly impact rate-sensitive sectors such as autos and housing without addressing global shipping disruptions or dampening ongoing investments in artificial intelligence infrastructure.
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Key terms
1. Consumer Price Index (CPI): A measure published by the Bureau of Labor Statistics that tracks the average change over time in prices paid by urban consumers for a basket of goods and services.
2. Core CPI: An underlying measure of consumer inflation that removes volatile food and energy components to provide a clearer view of long-term price trends.
3. Real average hourly earnings: A measure of worker pay that adjusts standard cash wages for changes in consumer inflation to determine actual purchasing power.
Source: Nate Gerze, CFA – Economist, Brian S. Wesbury – Chief Economist, and Robert Stein, CFA – Dep. Chief Economist, First Trust Portfolios — Data Watch. Read the original at ftportfolios.com.
