United States: Energy Again Contributed to Price Growth in October

Price growth in October was stronger than expected. First, energy again contributed to the increase in the CPI. Admittedly, the rise in gasoline and fuel oil prices last month was more modest than in the previous two months, but it remained positive. In addition, electricity prices accelerated in October, with a monthly gain of 0.9%, the largest since April. Second, food prices posted their biggest increase since April, notably with a jump in meat (+0.6%) and vegetables (+2.2%). There is no doubt that the sustained rise in food and energy prices through October contributed to the political upheaval seen in the November 3 midterm elections.

Excluding food and energy, the 0.3% monthly increase in core CPI was once again slightly stronger than expected. Goods prices showed a modest deceleration, owing in part to a 3.3% drop in used vehicle prices. This was, however, offset by the first increase in medical care commodities prices since December 2025. There were also notable increases in household appliances and, once again, computer equipment. Prices for services excluding energy grew a little less in October (+0.3%) than in September (+0.4%). Housing pressures eased somewhat, and airfare growth was much more modest than in previous months. However, core services excluding housing again accelerated on a 3‑month annualized basis, rising from 2.0% in August to 4.6% in September and then to 5.5% in October, the highest since April 2024.

Inflation remains elevated in the United States. Although energy prices should soon start to subtract from total CPI growth, price pressures still appear fairly widespread. In these circumstances, and given the recent labour market results, conditions appear favourable for the Federal Reserve to raise its policy rate at its December meeting.