Consumer prices rose 0.4% from September to October, according to data released by the Labor Department, down from a 0.6% increase the previous month, WDSU reported.
The latest reading showed inflation running hotter than economists expected, matching a 0.3% rise in core prices that also exceeded forecasts by a tenth of a point.
Inflation has increased family expenses by hundreds of dollars per month since January 2025, according to WDSU.
The government omitted an annual inflation rate for the period because a federal government shutdown prevented data collection in October 2025.
Financial markets reacted sharply to the price pressures and subsequent central bank commentary. Treasuries slumped and pushed yields higher after the report, while the two-year Treasury yield surged 17 basis points on Tuesday for its largest single-day jump since April 2025, cnn.com reported.
Fed considers jumbo hike
Federal Reserve Governor Chris Waller said the central bank might need to take aggressive action to cool the economy. Waller said during remarks in London that he would consider backing a 50-basis-point rate hike at the December policy meeting if core inflation persists at 0.3% or higher, cnn.com reported.
“[A] stronger policy move may be needed,” Waller said, according to CNN.
“Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take,” Waller said. He added that he intends to monitor how the artificial intelligence buildout impacts high-tech goods and whether energy price increases continue to add pressure.
Traders adjusted expectations following the remarks and the consumer data. Markets priced in a 91% probability of a quarter-point rate hike and a 9% chance of a half-point move for December, according to CME data cited by cnn.com.
Another day, another worrying US inflation statistic. PPI (basically business inflation) is +6.5% in the past year. That's even hotter than the ~4% consumer inflation. Businesses are almost certainly going to pass some of those higher costs onto consumers. It's yet another… pic.twitter.com/kYgVlhURo8
Treasury yields rise as equities close lower
The 10-year Treasury yield jumped 10 basis points to close at 4.98%, briefly crossing 5% during trading sessions. Stephen Stanley, chief U.S. economist at Santander, noted in a client report that Waller’s mention of a half-point move likely falls outside the immediate consensus of federal officials, though persistent inflation could jeopardize expectations for a pause in monetary tightening by 2027, cnn.com reported.
Equities closed slightly lower on Tuesday following the data release.
The S&P 500 declined 0.4% and the Nasdaq dropped 0.74%, while Nvidia shares fell 5.47% amid an ongoing board investigation concerning CEO Jensen Huang, cnn.com reported.
Voters expressed widespread frustration over the cost of living during the midterm elections, ousting Republican majorities from the House and Senate.
An AP Voter Poll encompassing 100,000 participants indicated that approximately two-thirds of respondents blamed presidential policies for higher expenses, with roughly 9 in 10 calling the cost of living a major factor in their ballots, WDSU reported.
More on Labor Department
Producer Prices in the US rose 6.5% over the last year and 4.3% per year over the last 5 years. 2% inflation is a myth. The Fed has lost all credibility when it comes to fighting inflation. pic.twitter.com/RgVoKIXIOp
Influenced by the recent "Fedspeak," markets are now pricing in three-and-a-half rate hikes by the Federal Reserve over the next 12 months (Bloomberg data below).#economy #markets #federalreserve pic.twitter.com/MnWGrnZ0V5
Relief as US PPI inflation doesn't follow the CPI's unpleasant surprise: October monthly PPI came in line with consensus for core (0.3%) and better than expected for headline (0.3% vs. 0.4% expected). This brings the annual measures to 5.0% (core) and 6.5% (headline),…
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