Inflation remained elevated in October even as energy prices eased, raising expectations of another Fed rate hike. Shelter returned as the largest driver of headline inflation, accounting for over 30% of the monthly increase. Core inflation, which excludes volatile food and energy components, rose by 0.3% for the third consecutive month, suggesting broad-based price pressures across the economy. The Bureau of Labor Statistics did not release the annual inflation figure this month as October 2025 data is unavailable for comparison due to last year’s government shutdown.
On a monthly basis, the CPI rose by 0.4% in October (seasonally adjusted), while the “core” CPI increased by 0.3%. The monthly increase in core CPI has remained at 0.3% since August.
The price index for a broad set of energy sources increased by 0.7% in October, as decline in natural gas (-0.8%) was offset by increases in fuel oil (+2.0%), gasoline (+1.0%) and electricity (+0.9%). Meanwhile, the food at home and food away from home indexes rose by 0.4% and 0.5% respectively.
Outside of energy, other top contributors that rose in October included indexes for recreation (+%), medical care (+0.3%), motor vehicle insurance (+0.7%), household furnishings and operations (+0.2%) and education (+0.3%). Meanwhile, the indexes for used cars and trucks (-1.2%) and communication (-0.1%) were among the major indexes that decreased over the month.
The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.3% in October, following the same increase last month. The index for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.3% and 0.2% over the month.
NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than core inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster than core inflation, the real rent index rises and vice versa. The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components). In October, the Real Rent Index fell by 0.1%.