Food prices shot higher in October, along with medical care, household furnishings and several other categories, pushing United States inflation above forecasts. The consumer price index for October rose 0.4 percent from September, down from the prior month 0.6 percent increase, but above the 0.3 percent analysts had projected, and the index for food rose 0.5 percent in October after being unchanged in September.
Why it matters
Shelter is picking up again, and it is the part of the report that worries the Fed most. Rent rose 3.02 percent on the year and shelter 3.38 percent, the biggest annual increases since late 2025, and shelter is the largest single component of the index. When rent and food rise together, households feel it at the checkout and in the rent cheque in the same month. Energy rose 0.7 percent and gasoline 1.0 percent in the same report, so the pressure is spreading from fuel to food.
The report follows last week midterm elections in which voters turned sharply against President Donald Trump Republican Party in part due to persistent inflation. The prior CPI report had shown the effects of a big jump in fuel prices following renewed clashes in the United States Iran war over the summer, and the October report shows the pressure has spread from fuel to food.
What happens next
The Fed response is now the question. The report sets the stage for a December Fed hike, according to Oxford Economics, and Fed Governor Christopher Waller said a core reading of 0.3 percent would prompt him to consider a half point hike. Goldman Sachs now expects a December hike and has added a third hike in March 2027.
What happens next will be decided at the Fed meeting on December 8 and 9. A 25 basis point hike is fully priced, with a small chance of 50, and the Cleveland Fed estimates annual inflation at 3.8 percent, well above the 2 percent target. For households, the message is that the grocery bill is rising again, and the Fed answer will be higher borrowing costs. The Cleveland Fed estimated annual inflation at 3.8 percent, well above the Fed 2 percent target, and the food index rose 0.5 percent after being unchanged in September.
