This was the third consecutive bad month for CPI inflation.
The BLS reports the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in October after rising 0.6 percent in September
BLS Missing Data
- BLS did not collect survey data for October 2025 because of a lapse in appropriations.
- For most CPI series, BLS could not publish October 2025 indexes.
- I will not have year-over-year charts this month as a result
The BLS rounds to 1 decimal point. I round to 2 decimal places
CPI Month-Over-Month
- All Items: 0.35 percent
- All Items Excluding Food and Energy: 0.30 percent
- Food and Beverage: 0.45 percent
- Shelter: 0.30 percent
- Owners’ Equivalent Rent: 0.32
- Rent of Primary Residence: 0.20
- Medical Care Services: 0.30 percent
- Medical Care Commodities: 0.52 percent
- Energy: 0.70 percent
- Gasoline: 1.04 percent
- Food at Home: 0.44 percent
- Food Away from Home: 0.52
There are no bright spots in October. Every index is over the Fed target.
CPI and Core CPI Month-Over-Month
CPI Month-Over-Month Energy, Gasoline, Utilities
Energy, Gasoline, Utilities and Fuel Month-Over-Month
- Energy: 0.70 percent
- Gasoline: 1.04 percent
- Utilities and Fuel: 0.64
CPI Month-Over-Month Food
Month-Over-Month Food
- Food and Beverage: 0.45 percent
- Food at Home: 0.44 percent
- Food Away from Home: 0.52 percent
The BLS weights food at home as 8.23 percent of the CPI. It weights food away from home at 5.29 percent of the CPI.
Actual spending is reversed. Thus, the food and beverage percent is higher every month than reported.
CPI Month-Over-Month Shelter
Shelter is over 35 percent of the CPI. If shelter has bottomed, and I believe so, it will add upward pressure on the CPI.
CPI, Shelter, and PCE Year-Over-Year 2026-09 – September
September Data
Year-Over-Year CPI and PCE Percent Change – September
- CPI: 3.7 percent
- CPI Shelter: 3.2 percent
- CPI Excluding Food and Energy: 2.6 percent
- PCE: 3.7 Percent (August)
- PCE Excluding Food and Energy: 3.3 Percent (August)
CPI Year-Over-Year Food – September
CPI Year-Over-Year Food Details – September
- Food and Beverage: 2.4 percent
- At Home: 1.8 percent
- Away from Home: 3.5 percent
Because the BLS underweights food at home and does not include tips, food and beverage at 2.4 percent is understated.
CPI Core Services vs PCE Less Food and Energy – September
Core Services M/M and Y/Y – September
- CPI Core Services M/M: 0.37 percent
- CPI Core Services Y/M: 3.16 percent
- PCE Services Less Food and Energy M/M: 0.20 percent (August)
- PCE Services Less Food and Energy Y/Y: 3.34 percent (August)
This is the key chart in this post because the Fed’s preferred measure of inflation is PCE excluding food and energy.
The Fed has missed inflation targets for 63 straight months on PCE and 65 straight months on the CPI.
I fail to see how anyone can get a rate cut or even a rate hold out of that chart.
CPI and PCE Are Both Understated
- Neither measure counts property taxes, homeowner’s insurance, or home prices.
- Food is understated because of improper weights.
- Medical insurance costs are ridiculously calculated based on retained earnings, not consumer prices.
Yet, economists wonder why people are more upset about inflation than what the numbers show.
Another Fed Rate Hike Coming
In August I said “A rate hike in September is all but certain after this report.”
And so it was.
Last month I said there would not be a hike in October, but there should be. That was correct as well.
My statement from a month ago was “As of now, expect a December hike. There is no November meeting.”
The Fed went out of its way to issue forward guidance when a parade of Fed governors and presidents pushed back on an October rate hike, without mentioning the obvious reason – the election.
Fed Chair Kevin Warsh stopped forward guidance in theory, but not practice, The Fed will always find a reason to do what it wants and telegraph it, forward guidance or not.
The Fed is behind the curve again.
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Global diesel reserves are at an all time low. The polar vortex disruption is at an all time early high. The need for warmth in the northern hemispheres is at least at a point where human hypothermia is abated … As the global equity markets and gold in USD and crypto in USD valuations plummet, diesel valuation is likely to be oppositional. 16 and 17 November 2026 will be a replay of 16 and 19 October 1987.
off topic, but this is a great take on how vile wiles and whitehouse is. https://www.youtube.com/watch?v=dMBBOawFy_4
Great video, makes the case for exit strategy all on its own, no other reasons needed.
54 days till all you suckers and losers are owned by the libs officially. I suspect there will be more tax and spend to “help” the poor but the first order of priority will be more funding for Israel and more warmongering for Israel because priorities matter!
I miss Jojo telling us all that it’s well worth it for Americans to suffer so Israel can gloat.
In any event, it’s Trump turtles all the way down and inflation all the way up!
oh and…
Do worry, Trump, Walrus, GOP, and democrats will find a way to make things even worse.™
I think the Fed will do a .50 or even .66 in December. Will be a great time to buy-write TLT because eventually Trump will break the economy, Fed will cut, then inflation will go ballistic again. Let’s just hope there isn’t a huge default on bonds.
be great if they default. i’m expecting them to do that to foreign owned holders of Tbills in the rather near future. for starters…………..
The United States cannot involuntarily default on debts in a currency that the Fed can create in unlimited quantities at will.
Yes, I know, the Fed is technically a private entity, but it has the power to issue the currency only because the Federal Reserve Act grants it that power, and this authority can be taken away at any time.
2 percent inflation mandate my ass
Maybe they meant 2% minimum?
Or 2% per month
Isn’t this going to settle out now that the democrats are in power! The war in Iran is likely over or it soon will be and oil should stabilize to historical levels. Is October relevant or is what will happen in 2027 relevant to what the fed should do? March 1 will be the one year anniversary of the war, we might actually deflation after that point since oil prices should go down markedly compared to the prior year.
Oil is not the main factor causing inflation.
Other critical issues: labor shortages due to Trump’s immigration policies, Trump’s tariffs, massive budget deficits due to Trump’s tax cuts and war on Iran, and price increases just because people are expecting them so corporations will do it.
The war may or may not be over. But either way it’s going to be a year or more after the war ends before oil flows again like it did pre-war due to all the destruction.
“Isn’t this going to settle out now that the democrats are in power!”
Team D has huge spending plans. So no. Their plan to pay for it by soaking the rich will come to an abrupt halt when the donor class says no.
Washington state keeps spamming new taxes every which way and still can’t balance the budget because the money keeps walking across the border or is disappeared by clever accountants. The CO2 tax is borne nearly entirely by the rural population which is not exactly flush in cash.
“Team D has huge spending plans.” That is rich, considering that Trump and a Team R Congress spent the last two years spending like drunken sailors.
What would Mish do to curb inflation? Instruct the Fed to quit printing money, cut spending to balance the budget, cut needless regulations, and simplify the tax code?
The bigger problem is Congress, not the Fed. But the Fed can shrink its balance sheet to zero.
There’s an old saw in economics I was taught in an MBA class that goes something like this:
If a company reasonably feels it can raise prices with impunity, it will. Initially, the increased prices filter to shareholders through increased profits. But over a fairly short period of time, it will filter through pay increases to the corporate bureaucracy and vendors. Once this has happened, corporations are resistant to lowering prices. And the only way you can get them to is through increased competition.
Moral of the story: break up monopolies and oligopolies, get rid of tariffs and compete with China.
I hope it’s not another meaningless ¼ point. We’ve been suffering from that for years.
Whatever it is, this will be blamed as the cause for the Ai bust, which has already started.
The real question is by how much the Fed will raise rates in Dec. By either the Taylor Principle or the Natural Rate of Interest Framework, the current Fed rate is considered highly accomodative. In this case, both models actually agree that the Fed Funds rate should be about 6% to effectively decelerate the economy. That’s a 2% increase from the current rate. In the current situation, anything less than a 0.5% increase in December will signal that the Fed has no real interest in controling inflation.
The flip side though is that if the Fed does decide to tighten agressively, that is going to hurt many people because the cost of financing will go up on everything. While the cost of vehicles may have only gone up by 20% over the last 5 years per the CPI, the average monthly payment has gone up by much more because of the rise in interest rates. That’s what people are feeling. And increases in financing interest rates are not included in the CPI. They used to be until the early 1980s, but when Volker had to drive interest rates very high to combat inflation, that actually caused inflation to further accelerate because of the feedforward loop (higher interst rates caused the CPI to increase because the CPI included financing charges). The solution: finance charges were removed from the CPI. That’s why today while the CPI may somewhat accurately reflect the price of vehicle, the CPI definitely does not reflect what the average person actually pays to purchase a vehicle.
The Fed servers either the owner class or the rentier class, not we the people. Then again, it is a banking cartel of the owner and rentier classes, so the only surprise is why they were given control over sovereign coinage. Unless, the coinage is not… sovereign.
What exactly is the Taylor Rule? Heard it years ago but forgot.
The rate cut mongers will never stop screaming. They want money for nothin’ and their chicks for free. Expect some extra loud squeals in December when K-Warsh drops a 50bps hike on ’em.
Good for Dems, GOP and all others to ponder: “It’s the affordability, stupid.”
There is a huge low-level service economy that was very valuable and competitively affordable, being done by immigrants. These are not highly educated or H-1B people, but people with a work ethic, to do upholstery, child and elder care, gardening, etc. Trump threw a huge wrench into it, simply making it more costly and less productive. This is inflationary. Plenty of these jobs are rejected by the native-born.
Affordability ultimately stems from productivity. Trump’s noise and uneconomic frictions imposed across the economic and political and attentional landscape have impaired this. His tax cuts encouraged some, but also played to enhancing the advantages the already-successful. Oligarchic capture wedged its way in. “Let them eat meme coins.”
The broad public that voted for his simple promises wants in. They will punish anyone who doesn’t connect these kinds of dots.
Anyone with a brain knows that inflation is not moderating. Too bad most of our government officials are like the Scarecrow in the Wizard-of-Oz….”if I only had a brain”
that’s more like the voters. the owners of usa are more like the wizard of oz. flim flam carnival barking medicine scammers turned into MIC and wall street and oil and farming and Zion power mongers………
I think it is much worse – for me, it’s not ”if I only had a brain” but rather “if I only had a concept of what a brain is”
Check out the orders of ignorance – https://www.5oi.org/the-five-orders-of-ignorance
ha ha ha. oh the amerikan people really are NOT stupid. not retards. they can tell you baseball stats or prices of pretzels at walmart, or their stupid little weekend vacations or stock portfolios or on and on and on……… but they just don’t care to think about anything meaningful. they are nihilists. so as long as the empire keeps chugging along why should they care if we bomb the living fuck out of school girls in persia or starve people in ukraine or gaza or viet nam or iraq etc……………they were taught to be nihilists from their parents and grand parents…………back to at least 1898 Teddy years and much further back, too.
Real thinking, actual decision making, is outsourced, and the index of everything is a menu of incredibly petty gluttonies (and equally importantly, performing them in front of peers), and reenactments of pseudo-meaningful, anodyne “holidays” and such. If these menu items are ticked, the cerebral cortex shuts off.
please watch the most important documentary ever. “century of the self”. 4 parts free on youtube. adam curtiss BBC. this will explain the why and the how this was accomplished. nihilism 101 brought to you by madison ave, wall street, and psychology. a century ago.