Hot October Prices Bring a Half-Point Rise Into Play

WASHINGTON, Nov. 10 — ConsumerConsumer prices rose a seasonally adjusted 0.4 percent in October, and 0.3 percent excluding food and energy, the Bureau of Labor Statistics reported on Tuesday. Economists surveyed by Dow Jones had expected 0.3 and 0.2 percent, CNBC reported. Electricity rose 0.9 percent, its largest monthly rise since April.

Hours earlier, in London, Christopher Waller, a governor of the Federal Reserve, had said that if core prices rose “around 0.3 percent or even higher,” a half-point rise in interest rates “should be considered at the December meeting.” Traders put the odds of one at 13.6 percent on Tuesday, from around zero before the report, CNBC reported, citing CME Group’s FedWatch tool.

For the companies building out artificial intelligence, the report touched two costs at once. Money grew dearer: the 10-year Treasury yield ended Tuesday at 5.00 percent, up 13.8 basis points, by CNBC’s quote at 5:05 p.m. And electricity, which data centers use in great quantity, rose more than twice as fast as prices overall.

There was no annual rate to report. “BLS did not collect survey data for October 2025 because of a lapse in appropriations,” the bureau said. “For most CPI series, BLS could not publish October 2025 indexes. As a result, BLS cannot publish 12-month percent changes for October 2026 for indexes where October 2025 data are unavailable.”The Fed’s Own GaugeThe Fed’s 2 percent target is measured by the personal consumption expenditures price index, which rose 3.6 percent in the 12 months through September, Anna Paulson and Lorie Logan, presidents of the Philadelphia and Dallas Feds, said on Tuesday. October’s figure is due in “a couple of weeks,” Ms. Logan said.

Shelter rose 0.3 percent, accounting “for over thirty percent of the monthly all items increase,” the bureau said. Food rose 0.5 percent. Energy rose 0.7 percent, after 5.2 percent in September. Core prices rose 0.3 percent, as they did in September and August, and used cars and trucks fell 1.2 percent.

Electricity rose 0.9 percent in October, after 0.2 percent in September, while piped natural gas fell 0.8 percent. The bureau did not say why. CNBC called the rise in electricity prices “a potential complication from the AI story.” Lorie Logan, president of the Dallas Fed, speaking in Houston, said her bank’s research this year had “examined the ways the data center buildout is moving electricity prices.” Power is also part of the argument over where data centers go: three city councils voted on Tuesday to stop new large ones for now.

The Fed

Mr. Waller had set out his terms before the release. Even if inflation improved in October, he said, he would “still support a 25 basis point increase in the FOMC’s policy rate at our December meeting.” A repeat of the past two months, he said, might need more: “Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.”Where the Rate StandsThe Fed raised its target range by a quarter point in September and held it at 3.75 to 4 percent in October, on a 10–2 vote. Ms. Logan put the federal funds rate at 3.88 percent. She votes on the rate this year, CNBC noted.

Anna Paulson, president of the Philadelphia Fed, named three main factors keeping inflation elevated: “tariffs, energy prices, and the AI buildout.” The October figures, she said that evening, suggested “inflation pressures are still very much with us.” “The AI boom is also adding to inflation,” she said. “Demand for chips, power generation equipment, and other components tied to the buildout has surged.”

The AI boom is also adding to inflation.

Yet she made the case for going slowly. The effects of tariffs were “beginning to fade,” she said; wage growth was “not adding to price pressures”; long-term expectations were “well anchored.” “I prefer to tighten gradually when conditions allow,” she said. “For now, further gradual tightening seems appropriate.”

Ms. Logan, who spoke after the release and called it “higher than expected,” was more specific. The Fed’s committee, she said, “needs to implement at least two more 25-basis-point rate increases.” “It may be possible to move more rapidly this winter than the FOMC has moved so far this fall,” she said.

The Market

The Treasury sold $42 billion of new 10-year notes on Tuesday at a high yield of 5.020 percent, with bids for 2.46 times the amount it accepted, by its own results. A rise of at least a quarter point in December was fully priced in, CNBC reported.The Last Two SalesThe Treasury last sold 10-year notes on Oct. 7, reopening an August issue, at a high yield of 5.300 percent. On Sept. 9 it paid 4.834 percent. Stocks fell. The S&P 500 closed down 0.38 percent at 7,520.93 and the Nasdaq Composite down 0.74 percent at 25,065.87; CNBC put Nvidia at the center of the decline.

CoreWeave, which rents out computing for artificial intelligence, reported its quarter the same afternoon. “At current yields, we do not intend to issue additional parent-level unsecured debt through 2027,” Nitin Agrawal, its finance chief, said, as quoted by CNBC.

The bond market is closed on Wednesday for Veterans Day; producer prices for October follow on Friday at 8:30 a.m., and the Fed meets Dec. 8–9. November’s consumer prices are due on Dec. 10, the day after that meeting ends.