PREVIEW - US CPI data for October will be released at 13:30GMT/08:30EST

• The consensus expects headline CPI to rise 0.3% M/M in October (prev. 0.6%), while core CPI is expected to rise by 0.2% M/M (prev. 0.3%). Note that the BLS will not publish Y/Y CPI figures owing to the October 2025 government shutdown, when the inflation data were not released. Elsewhere, PPI (due Friday) is expected to rise 0.4% M/M (prev. 1.3%), with the annual rate seen rising to 6.6% Y/Y (prev. 6.3%), while core PPI is expected to rise 0.3% M/M (prev. 0.7%).
• The data will help inform expectations for October PCE inflation, the Fed’s preferred inflation gauge, due on 25th November. Analysts suggest risks to core CPI are skewed to the upside; Bloomberg recently launched a new core price index, which is currently tracking a 0.33% M/M rise in October. However, Pantheon Macroeconomics says the increase is being flattered by a 3.8% jump in lodging prices (contributing 5bps), as well as a 0.9% rise in airline fares (contributing 1bp), components which Pantheon considers unreliable.
• In terms of the drivers, headline inflation is expected to moderate as gasoline’s contribution fades, while core inflation should be restrained by softer shelter costs, with vacancies at their highest since 2014 limiting rent growth, alongside softer used car prices. However, upside risks remain as the earlier surge in energy prices feeds through to freight, transportation and core goods prices, while subscription services, computers, postage and courier fees have also seen price increases.
• Regarding monetary policy implications, Barclays forecasts headline CPI rising 0.24% M/M and core CPI increasing 0.22% M/M, which the bank estimates would translate into a 0.21% M/M rise in core PCE in October. Barclays’ baseline remains for the FOMC to hike rates by 25bps in December.
• Ahead of the CPI report, the influential Fed governor Waller said that a half-point rate hike may be needed in December if October core CPI comes in around 0.3% or higher, though he’d support a quarter-point hike even if CPI improves, adding further tightening will be needed. He called US inflation too high and September’s data bad, citing concern over breadth of price increases.

A CPI print landing between Fed meetings has historically mattered less for the number itself than for how it feeds the preferred PCE gauge; the translation runs through the medical, financial services and portfolio management components that reweight differently in PCE, and bank estimates of that mapping are the first thing to look for in the instant reaction. The unusual wrinkle here is the missing year-on-year figures owing to the shutdown-affected prior release, which strips the market of its usual anchor and concentrates all attention on the monthly core rate and its rounding. The case distinction that matters is the composition of any upside: a beat driven by lodging and airfares has tended to fade and been treated as noise, while breadth across core goods and non-housing services is what has previously shifted Fedspeak from data-dependent to alarmed, a concern an influential governor has already voiced explicitly. That governor's pre-commitment framing, tying the size of the next hike to a threshold on the core monthly print, is the rare episode where the reaction function is stated in advance, so the front end and the dollar should price the binary rather than the central tendency; in past cycles, officials laying out such tripwires has compressed the distribution of outcomes around the stated levels. Shelter deceleration flagged by elevated vacancies is the established slow-moving disinflationary channel, but it arrives with long lags and has not historically prevented the Fed from hiking into falling rent inflation when the broader core stays firm. The follow-ons are the PPI release days later, the PCE print later in the month, and whether other officials endorse or walk back the half-point framing in the interim.