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US inflation is expected to ease in October after recording sharp increases over the previous two months, offering some relief to consumers and potentially influencing the Federal Reserve's next interest rate decision.
The Consumer Price Index (CPI) is projected to rise 0.3% in October, compared with a 0.6% rise in September, the biggest monthly increase since April. The estimate is based on the median projection in a Bloomberg survey of economists ahead of Tuesday's release by the Bureau of Labor Statistics (BLS).
Core inflation, which excludes volatile food and energy prices, is also expected to moderate. Economists surveyed by Bloomberg expect core CPI to rise 0.2% in October, marking its smallest increase in three months.
The October inflation report will come with a significant limitation. The BLS will not publish year-on-year inflation figures because it skipped the October 2025 CPI release during the federal government shutdown.
The upcoming data will therefore focus on monthly price movements, with economists examining individual categories for signs of whether inflationary pressures are easing.
Bloomberg Economics expects headline CPI to have slowed to 0.25% in October from 0.65% previously. Its economists also project core inflation at 0.24%, down from 0.33% in September.
The expected moderation is attributed to softer price increases in goods and services. Used cars and consumer electronics, which have faced pressure from the artificial intelligence boom, are expected to show slower inflation. In services, increases in owners' equivalent rent are projected to be down by a third from September's spike.
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The October CPI report will be the last inflation reading before the Federal Reserve's December meeting. Investors expect policymakers to raise interest rates, while economists will look at the latest figures for clues about inflation risks heading into early 2027.
The outlook also follows a stronger-than-expected US jobs report for October. Continued employment growth could support consumer spending and allow the Fed to maintain its focus on inflation.
Another key report is due Friday, when the Producer Price Index (PPI) is expected to show annual inflation accelerating to 6.6% in October, its steepest increase in nearly four years.
Meanwhile, National Association of Realtors data due Thursday are expected to show contract closings on previously owned homes falling to their lowest level since 2010, as mortgage rates remain elevated.