US inflation gauge ticks higher with price pressures still stubborn

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Consumer price increases accelerated last month, the latest sign that inflation’s steady decline over the past two years has stalled

WASHINGTON — Consumer price increases accelerated last month, the latest sign that inflation's steady decline over the past two years has stalled in recent months.

According to the Federal Reserve's preferred inflation gauge, consumer prices rose 2.3% in October from a year earlier, the Commerce Department said Wednesday. That is up from just 2.1% in September, though it is still only modestly above the Fed's 2% target.

Yet excluding the volatile food and energy categories, so-called “core” prices also picked up, climbing 2.8% last month from a year earlier, up from 2.7% in September, according to Commerce's personal consumption expenditures price index. Economists closely watch core prices because they typically provide a better read on where inflation is headed.

Inflation has fallen sharply since it peaked at 7% in mid-2022, according to the Fed's preferred measure. Yet yearly core inflation has fluctuated between 2.6% and 2.8% since February. Price increases have remained elevated in services, including apartment rents, restaurant meals, and car and home insurance.

The elevated reading could make the Federal Reserve less likely to cut its key rate at the next meeting in December. Next month's inflation data, some of which will be issued a week before the meeting, may play a key role in the Fed's decision.

“This report will likely provide further ammo to Fed officials who prefer to lower rates gradually,” Omair Sharif, chief economist at Inflation Insights, wrote in a client note, “and may strengthen the argument for a pause at the December FOMC meeting.”

Many economists, however,