U.S. consumer prices rose more than economists expected in October, with the Consumer Price Index up 0.4% after a 0.6% gain in September, according to data the Labor Department’s Bureau of Labor Statistics released Tuesday. Economists surveyed by Reuters had projected a 0.3% monthly increase.

The BLS did not release a year-over-year inflation figure for October because last year's federal government shutdown prevented the agency from collecting consumer price data for October 2025, leaving no comparable baseline. Annual inflation stood at 3.7% in September, well above the Federal Reserve’s 2% target.

Prices excluding food and energy, known as core CPI, rose 0.3% in October for the third consecutive month. Economists expected a smaller 0.2% increase, suggesting underlying inflation pressures remain persistent even after accounting for changes in food and energy costs.

The missing October 2025 data will not affect the calculation of the Personal Consumption Expenditures price index, the separate inflation measure the Federal Reserve uses to assess progress toward its target. That measure, like the available CPI readings, has remained above 3%.

The report strengthened expectations that the Federal Reserve will raise its benchmark interest rate at its December 8-9 meeting. The central bank left rates unchanged in a range of 3.75% to 4% at its previous meeting. Following Tuesday's inflation figures, financial markets assigned roughly an 85% probability to a quarter-point increase, while expectations for a larger half-point hike also increased.

Federal Reserve Governor Christopher Waller had said he would consider a half-point increase if October core inflation reached 0.3%, the level reported Tuesday. A larger increase is not guaranteed, but the comments added to concerns that policymakers could take a more aggressive approach if price pressures persist.

Higher energy costs linked to the U.S.-Israeli war with Iran and import tariffs implemented by the Trump administration have contributed to inflationary pressure, according to economists cited in the reporting. Rising living costs also became a major political issue ahead of last week's midterm elections, in which Republicans suffered significant losses.

The inflation report also weighed on financial markets Tuesday, with stocks falling and Treasury yields climbing as investors reassessed the likelihood and potential size of a December rate increase