U.S. inflation was higher than expected last month in a sign that the rising prices that powered sweeping Democratic victories in last week’s midterm elections will continue to pose challenges for the White House and the Federal Reserve.
The consumer price index rose 0.4% from September to October, the Labor Department said Tuesday, down from 0.6% the previous month. Because last year’s government shutdown meant no data was released for October 2025, the government did not report a yearly inflation rate.
Yet with solid gains in both chambers, Democrats in Congress will soon face the challenge of how to address voters’ affordability concerns. President Donald Trump has acknowledged voter anger over the Iran war and gas prices but has shown no sign yet of changing course. The persistence of elevated inflation makes it highly likely that the Fed will raise its key interest rate at its next meeting in December. The Fed increases borrowing costs in an effort to cool spending and bring down inflation. U.S. markets dipped immediately after the inflation report and Treasury yields ticked higher, on expectations of more persistent inflation and higher rates from the Fed.
The report shows that inflation remains clearly above the Federal Reserve’s target of 2%, and Americans’ struggles with high prices were evident as they ousted Republican majorities from the House and Senate last week. The AP Voter Poll, a survey of 100,000 voters, found about two-thirds blamed Trump’s policies for higher costs.
Earlier Tuesday, Fed governor Christopher Waller, an outspoken member of the central bank’s rate-setting committee, said that a hike of a half-point next month was possible, double the size of the usual quarter-point increase. “Economic activity is strong, the labor market is stable, but inflation is too high, well above” the Fed’s 2% goal, Waller said. About 9 in 10 said the cost of living was a “crucial” or “major” factor in their vote.
