U.S. inflation rose more than expected in October, while markets anticipate a Fed rate hike in December

Inflation in the United States rose more than analysts expected in October, boosting financial market expectations that the Federal Reserve (Fed) will raise its benchmark interest rate at next month’s meeting.

According to data released Tuesday by the Department of Commerce, the consumer price index rose 0.4% in October, following a 0.6% increase in September. Economists had expected a monthly increase of 0.3%. Core inflation, which excludes volatile food and energy prices, rose 0.3%, in line with the previous month’s increase but above the 0.2% estimate.

U.S. authorities did not publish the annual inflation rate for October because last year’s budget shutdown prevented the collection of data for the same month in 2025, making a comparison impossible. In September, consumer prices had risen 3.7% year on year, well above the Fed’s 2% target.

Last month, the U.S. central bank kept its interest rate in the 3.75%-4% range. Following the release of the new data, markets are pricing in a 25-basis-point hike next month. High inflation was also one of the factors cited in analyses of the poor results achieved by Republicans in the midterm elections.