The Inflation Report With No Annual Rate: October's CPI and the Fed's December Decision

Executive Summary

The Bureau of Labor Statistics released the October Consumer Price Index on 10 November, and the report carried a first: no annual inflation rate. Consumer prices rose 0.4% in October on a seasonally adjusted basis, after 0.6% in September, while core prices rose 0.3% for a third consecutive month. Both readings beat forecasts of 0.3% and 0.2%, and the core figure landed exactly on the threshold Federal Reserve Governor Christopher Waller had set the night before for considering a half-point rate rise in December.

The missing yearly rate is not a rounding choice. The bureau collected no prices in October 2025, when federal funding lapsed, so it cannot publish 12-month changes for most series. The last official annual reading remains September's 3.7%. With the Federal Reserve's 8-9 December meeting now the next decision point, and the November CPI due a day after it ends, the October report is the final inflation evidence the committee will see before it votes.

Methodology

This study rests on the Bureau of Labor Statistics' Consumer Price Index news release for October 2026 (USDL-26-1685), published 10 November 2026 at 8:30 a.m. Eastern, cross-checked against Reuters' wire reporting of the release and the Washington Post's account of Governor Waller's remarks. Market pricing is drawn from the CME Group's FedWatch tool and Kalshi's December decision market, as reported on 10-12 November, and policymaker statements are taken from their published speeches and remarks.

Comparative figures come from the bureau's September release, the Federal Reserve's September and October meeting records, and the October employment report from the Bureau of Labor Statistics. Where secondary reporting diverges on market odds, the half-point probability moved through the day as bond markets repriced, the study records the range and the time each reading was taken. All monthly changes are seasonally adjusted unless stated otherwise.

Empirical Findings

The headline index rose 0.4% in October, down from 0.6% in September but above the 0.3% economists polled by Reuters had expected. Core prices, which strip out food and energy, rose 0.3%, matching August and September and beating a 0.2% forecast. Before seasonal adjustment, the all-items index rose 0.2% to 337.511 on the 1982-84 base. Three months at 0.3% core is the clearest signal in the report: underlying inflation is running at a pace the Federal Reserve has described as too fast, and it is not slowing.

Shelter did the most damage. The shelter index rose 0.3% and accounted for more than 30% of the month's entire increase, while rent of primary residence rose a cooler 0.2%. Food prices rose 0.5% and energy 0.7%, so the pressure came from both the core and the volatile components at once. The bureau published only three 12-month changes: gasoline up 37.4% over the year, new vehicles up 0.7%, and used cars and trucks down 3.3%.

The absent yearly rate is a data hole with a cause. The bureau states plainly that it did not collect survey data for October 2025 because of the lapse in appropriations that ran from 1 October to 12 November 2025. Without that base month, 12-month changes cannot be computed for the headline or core indexes. Anyone quoting an October year-over-year rate is quoting a number the bureau never published, and the September readings, 3.7% headline and 2.6% core, remain the last official annual figures.

The market response was immediate. Fed funds futures put a quarter-point December hike at 91% and a half-point move at 9% on 10 November, per the CME FedWatch tool, with the half-point probability reaching about 15% in midmorning trading. By 12 November, Kalshi traders gave a 25-basis-point rise an 87% chance, a larger move 12%, and no change 3%. Futures fully priced three quarter-point increases by mid-2027, Reuters reported, and Goldman Sachs began forecasting another quarter-point hike in March.

Waller said hours before the release that he leans toward a quarter-point rise in December, but that a core reading around 0.3% or higher would mean a 50-basis-point move should be considered. October's core print met that condition exactly. Dallas Fed President Lorie Logan said the Fed should deliver at least two more quarter-point increases and raise rates at least half a point before pausing. Reuters calculated the data put core PCE inflation, the Fed's preferred gauge, on track to rise 0.34% in October, a pace above 4% annualised.

Outlook

The December decision turns on a calendar quirk. The Federal Open Market Committee meets on 8-9 December, its last meeting of the year. The November CPI arrives on 10 December, one day after the meeting ends, so it cannot influence the vote. October's report is therefore the last inflation evidence the committee will weigh, and it points the same way as the October jobs report, 165,000 payrolls against a 70,000 consensus, unemployment down to 4.1%, and the third quarter's 3.4% growth: an economy strong enough to absorb higher rates.

For households, the risk is the mirror image. Wages rose 3.1% over the year to October, below September's 3.7% inflation rate, leaving real pay falling for a seventh consecutive month. A December hike, and the further increases priced for 2027, would raise borrowing costs for mortgages and credit cards while the Fed tries to break core inflation stuck at 0.3% a month. The committee's choice is between moving fast enough to break that pattern and moving slowly enough not to break the hiring behind 165,000 new jobs.