- Prior core m/m was +0.3%
- Core unrounded +0.297%
- Core CPI y/y not published vs +2.6% prior
- Core unrounded y/y not published vs +2.564% prior
- Headline CPI m/m +0.4% vs +0.3% expected (prior +0.6%)
- Headline CPI y/y not published vs 3.7% prior
- Unrounded not published vs +3.738% prior
- Core goods +0.2% vs +0.3% m/m prior
- Real weekly earnings 0.0% vs -0.5% prior (revised to -0.4%)
- Supercore m/m roughly +0.4%, with just over half driven by services less energy services
Key sub-components:
- Owners’ equivalent rent: +0.3% vs +0.3% prior
- Rent of primary residence: +0.2% vs +0.2% prior
- Motor vehicle insurance: +0.7% vs +0.1% prior
- Airfares: +0.4% vs +1.2% prior
- Used cars: -1.2% vs +0.7% prior
- Apparel: +0.1% vs +0.3% prior
- Medical care: +0.3% vs +0.1% prior
- Lodging away from home: +0.6% vs +2.0% prior
- Energy m/m: +0.7% vs +5.2% prior
- Gasoline m/m: +1.0% vs +9.1% prior
- Food m/m: +0.5% vs 0.0% prior
- New vehicles: +0.2% vs +0.2% prior
Note that the BLS did not collect survey data for October 2025 because of a lapse in appropriations during the government shutdown. That also makes many of the numbers impossible to calculate.
Summing the BLS contribution table (food 0.064, energy 0.053, core 0.234) gives about +0.35% unrounded, which makes the headline number a tad better than it looks.
Following Waller’s hawkish comments, the market is fully priced for a December hike and is pricing in 60 bps of hiking in the year ahead. USD/JPY was trading at 158.19 ahead of the data and 158.44 afterawrds. S&P 500 futures were flat but down 0.7% afterwards. US 2-year yields were up 9 bps ahead of the data and +13 bps afterwards.
Waller said a half-point hike might be needed in December if core CPI comes in “around 0.3% or higher”. That raised the stakes on today’s report. He also said, he would support quarter-point rate hike in December even if October CPI improves versus September. Notably, he said he was particularly concerned about the breadth of price increases.
Looking through the data, the breadth shows up in supercore at +0.4%. Used cars and communications were “among the small number of major indexes that decreased,” the BLS wrote. Core goods ex-used cars rose 0.4% and core ex-shelter and used cars rose 0.4%, both the largest since January. Used car prices fell 1.2% m/m in October and without that, this report would have been ugly at +0.4% in all the key metrics instead of +0.3%.
Furnishings and supplies rose 0.7%, the largest since June 2025. Furniture was +1.2%, appliances +1.3%, tools and hardware +1.4%, and housekeeping supplies +0.9% (largest since January 2023). Transportation services were up 0.8%, the largest since January. Insurance was +0.7%, maintenance and repair +0.6%, and public transportation +2.0%.
For background, the Consumer Price Index from the US Bureau of Labor Statistics is the most market-moving inflation report in the world. It’s released monthly at 8:30 am ET, usually in the second week of the following month, and measures changes in the prices urban consumers pay for a basket of goods and services, including food, energy, shelter, vehicles, apparel, medical care, transportation and recreation.
Unlike Canada, where the focus is the unadjusted annual rate, US markets zero in on the seasonally adjusted monthly change, particularly in core CPI, which excludes food and energy. Traders often calculate the unrounded figures from the index levels, because the difference between a 0.24% and a 0.26% monthly gain can decide whether the print rounds up or down and how markets react.
Shelter is the largest component, at roughly a third of the overall index. It’s dominated by owners’ equivalent rent, an estimate of what homeowners would pay to rent their own homes, along with rent of primary residence. Because shelter is measured through leases that turn over slowly, it lags market rents by many months.
Markets also watch supercore inflation, core services excluding housing, which is seen as the best gauge of wage-driven price pressures. Volatile categories such as airfares, used cars, motor vehicle insurance and lodging away from home frequently drive surprises.
The Federal Reserve targets 2% inflation on the PCE price index rather than CPI, but CPI comes first and several components feed directly into PCE. Combined with PPI, it lets economists estimate core PCE before it’s released. A surprise in core CPI can move Treasury yields, the US dollar and equities sharply and shift rate expectations ahead of the next FOMC meeting.
