In economics, what people expected can matter as much as what happened. On Tuesday 10 November the US government reported that consumer prices rose 0.4% in October compared with September. That was slower than September’s 0.6%. But economists had forecast 0.3%, and the gap between forecast and result was enough to shake financial markets.
Start with what was measured. The Consumer Price Index follows the cost of goods and services that households buy. In October food rose 0.5% and housing 0.3%. Energy rose 0.7%, far less than its 5.2% jump in September. A second measure, called core CPI, leaves out food and energy because their prices swing the most; it rose 0.3%, when 0.2% had been expected.
One usual number was missing. The report gave no year-over-year figure, because the Bureau of Labor Statistics could not release full data for October 2025 on account of last year’s government shutdown.
The reason markets care is the Federal Reserve, the central bank of the United States. Its main tool against inflation is the interest rate. When the Fed raises rates, loans become more expensive, people and companies borrow and spend less, and prices come under less pressure.
Before the report, Fed Governor Chris Waller had drawn a line. If October inflation came in hot, he said, a half-point rise should be considered in December, twice the usual quarter-point step. Raising rates by only a quarter point, he warned, “would put our credibility at risk.”
Traders adjusted their bets at once. They put an 84% chance on a quarter-point rise in December, and the odds of a half-point rise went from 0% to 15%. The S and P 500, a share index of large US companies, fell 0.4%, and the homebuilder Lennar lost 5.4%, because higher rates make mortgages dearer.
Other markets moved too. The yield on the 10-year Treasury, the interest the US government pays to borrow for ten years, rose to 4.93%, and gold fell more than 2%. Oil offered some relief for future price reports: Brent crude, the international benchmark, fell 1.2% to $91.49 a barrel, having been above $112 at the start of the month. Waller’s own summary before the report was three words long: “Inflation is too high.”
US consumer prices rose 0.4% in October. Economists had forecast 0.3%. Food rose 0.5%.
The Federal Reserve is the central bank of the United States. It fights rising prices by raising interest rates. Then loans become more expensive, and people spend less.
Traders now put an 84% chance on a rate rise in December. The main US share index fell 0.4%.