U.S. Core CPI Rises 0.3% Month-on-Month in October, Exceeding Expectations for Three Consecutive Months

The U.S. core CPI rose 0.3% month-on-month in October, higher than the market expectation of 0.2%, marking the third consecutive month of exceeding expectations; the overall CPI increased by 0.4%. The rise in energy prices has spread to food, transportation, and other sectors, while service inflation remains persistently strong, complicating the Federal Reserve's efforts to control inflation. Specifically, food prices rose 0.5% month-on-month in October, with grocery prices recording the largest monthly increase since April; urban transportation service prices saw the largest monthly increase since 2020, and prices for airline tickets and delivery services also rose. Excluding energy and housing rent, service prices increased by 0.4%, and owners' equivalent rent rose by 0.3%. AI investments are bringing new cost pressures, with prices for computers and peripherals rising at an annualized rate of 25% over the past three months, and electricity prices increased by 0.9% month-on-month in October, marking the largest increase in six months. Morgan Stanley estimates that AI-related factors contribute about 6 basis points to the core CPI, with the impact still relatively limited, but as data center investments expand, related pressures may rise further. Chicago Fed President Goolsbee described the latest inflation data as approaching unsettling levels, while Fed Governor Waller stated that if the core CPI month-on-month increase reaches 0.3% or higher, a 50 basis point rate hike should be considered at the December meeting. Goldman Sachs has included a 25 basis point rate hike in its forecast for March 2027, expecting the federal funds rate target range to rise to 4.25% to 4.50%. Some economists warn that the transmission of energy prices has a lagging effect, and overly relying on current data may lead to excessive tightening of monetary policy.

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