BLS October data shows 0.4% price jump, missing year-over-year baseline

Households faced higher costs in October as consumer prices rose 0.4%, according to a government report released Tuesday. This monthly increase exceeded the 0.3% forecast by economists. However, the pace of inflation slowed compared to September, when prices climbed 0.6%. The October figure matched the monthly rise recorded in August.

The report lacks a standard benchmark because the U.S. Bureau of Labor Statistics did not publish data last October during the government shutdown. Consequently, the year-over-year price change, a key metric for scrutiny, could not be calculated. The most recent annual figure stands at 3.7% for the year ending in September. That rate is more than a percentage point above the Federal Reserve's 2% target. Annual inflation was 3.4% in August.

Shelter costs accounted for more than 30% of the total monthly price increase, rising 0.3% in October. Energy prices jumped 0.7% for the month. This represented a sharp cooling from the 5.2% surge seen in September. The Iran war initially drove gasoline prices up, pushing annual inflation to a three-year high in the spring. Prices eased over the summer but remained above pre-war levels.

Fuel costs dominated the price index in recent months. Gas prices jumped more than 9% in September from August. That increase accounted for more than half of the overall price rise in September, the most recent month with complete records. Since the midterm elections, oil prices have cooled, putting downward pressure on gasoline costs. The national average price for a gallon dropped below $4 as of Monday, according to GasBuddy data. This recent dip did not appear in Tuesday's report, which details October prices.

The data arrives as the Federal Reserve weighs a potential rate increase. Policymakers are balancing the need to cool inflation against the risk of slowing hiring. A jobs report released last week showed employers added 165,000 positions in October. This figure far exceeded the average of 48,000 jobs added monthly over the previous year. The strong labor market data may alleviate concerns about a cooling economy.

If the Fed raises rates at its December meeting, it will be the second hike in four months. The central bank had gone three years without raising rates before moving in September. That quarter-point increase aimed to cool demand, a policy that typically takes several months to show results. Market sentiment suggests a high likelihood of another hike. CME Group's FedWatch Tool pegs the odds of a quarter-point increase at about 82%.

Fed Chair Kevin Warsh held rates steady days before the midterm elections while waiting for more data. He maintained a firm stance on price stability during a press conference in Washington, D.C. Warsh stated that it is the central bank's responsibility to lower inflation. The agency will continue to monitor the interplay between shelter costs and energy prices as it decides on its next move.