U.S. CPI report to be released tonight at 21:30: no year-over-year data—what should investors watch?

Author: Jin10 Data

Because a government shutdown caused missing data a year ago, this report cannot provide the year-over-year inflation rate.

On Tuesday at 21:30, the U.S. Bureau of Labor Statistics will release the October Consumer Price Index (CPI). Investors will focus on whether prices, which have risen sharply for two consecutive months, are beginning to cool and whether the latest data can change the market's assessment of further Federal Reserve rate hikes.

A Reuters survey shows economists expect headline October CPI to rise 0.3% month-over-month, lower than September's 0.6%; core CPI, excluding food and energy prices, is expected to rise 0.2% month-over-month, potentially the smallest three-month increase.

A special feature of this CPI report needs attention. Because the October 2025 U.S. federal government shutdown caused the October CPI report to be missing, the Bureau of Labor Statistics will lack a comparable base and will be unable to publish annual (year-over-year) inflation data. Monthly (month-over-month) data will be released as usual. Therefore, the market will rely more on headline and core CPI month-over-month changes, as well as specific price components, to gauge the inflation trend.

In addition, this report will be the last CPI data before the Federal Reserve's December policy meeting (the next CPI will be released later on the day of the Fed's rate decision).

The October nonfarm payrolls report released earlier was stronger than market expectations, further reinforcing the view that the U.S. economy remains resilient. For Wall Street, which is reassessing the interest-rate outlook, whether inflation falls as expected has become an important variable determining the next phase of asset-price moves.

Inflation may be cooling, but price pressures have not disappeared

Previously, U.S. September CPI rose 0.6% month-over-month, the largest single-month increase since April this year, and two consecutive months of sharp gains deepened market concerns about persistent inflation.

Latest economist forecasts show that overall U.S. price increases in October may slow markedly. Core CPI is expected to rise 0.2% month-over-month, down from 0.3% in September. If the forecasts are realized, they would provide some cushion for the previously strong run of inflation data.

Citigroup economists expect the pass-through of high energy costs to other goods prices to be relatively limited, and service-price increases to remain moderate.

Bloomberg Economics expects the actual October headline CPI to rise about 0.25% month-over-month and core CPI to rise about 0.24%. The team believes that both goods and services price increases may slow, with particular attention to used cars, consumer electronics, and housing-related services prices.

However, easing energy prices do not mean inflationary pressures have been resolved. Although international oil prices fell sharply last week to below $100 per barrel, they remain up nearly 60% since the start of the year, and natural gas prices are also well above year-start levels.

Persistently high energy prices are raising transportation, manufacturing, agriculture, and household spending costs. Whether companies can continue to absorb these costs, and whether they pass pressure through by raising prices for goods and services, will affect the inflation trajectory over the coming months.

Corporate inflation concerns are rising; the market also needs to watch price pass-through

Recent corporate earnings reports show that U.S. inflation pressures have spread widely across industries.

Bloomberg tallies show that 'inflation' and related terms were mentioned 820 times in October earnings calls by S&P 500 constituent companies, the highest level since February 2024. Industrial companies accounted for about a quarter of the mentions, reflecting pressure from rising energy and logistics costs.

General Motors expects rising costs for commodities, logistics, and memory chips to create about $2 billion in headwinds this year. Coatings manufacturer PPG Industries said it is considering raising product prices to ease raw-material cost pressures.

Consumer goods companies face similar issues. Seasoning maker McCormick warned that elevated freight costs and weak consumer spending are affecting operations simultaneously, and the company still needs to assess the inflation and cost outlook for 2027.

These corporate comments make the detailed October CPI components more informative. If the energy price shock remains concentrated mainly in a few categories such as gasoline, while core goods and services prices begin to slow, the market may see the risk of broader inflation as easing. If housing, transportation, and other services prices continue to grow rapidly, persistent inflation will remain a major issue for the Federal Reserve.

This Friday, the United States will also release the October Producer Price Index (PPI). Economists expect PPI's year-over-year growth to accelerate to 6.6%, reaching a near four-year high. This data will further reflect price pressures in the business production process and provide additional evidence on whether costs continue to pass through to consumers.

CPI will provide key evidence on whether the Federal Reserve raises rates in December.

The October CPI is under close watch because the Federal Reserve's monetary policy stance is being tested by persistent inflation.

At its late-October meeting, the Federal Reserve held its benchmark interest rate steady, but officials have already argued for further monetary policy tightening. Markets currently expect that the Federal Reserve may raise rates in December and continue to hike rates in March next year.

Last Thursday, Cleveland Fed President Hammack said that to return inflation to the 2% target in a timely manner, the Federal Reserve needs to adopt a restrictive monetary policy stance. She prefers more frequent, smaller rate adjustments to reduce the risk of monetary policy lagging behind economic conditions.

Hammack previously cast a dissenting vote in the Federal Reserve's rate decision last month. She believes persistent supply shocks could lead businesses and consumers to gradually develop stronger inflation expectations, making it more difficult for the central bank to stabilize prices.

The latest employment data has also presented the Federal Reserve with a more direct policy choice. U.S. October nonfarm payrolls released last Friday rose by 165,000, beating all market forecasts. Resilient job growth indicates the economy can still withstand higher borrowing costs and gives the Federal Reserve room to keep its policy focus on controlling inflation.

If October core CPI comes in significantly below market expectations, investors may dial back their expectations for the magnitude or frequency of future rate hikes. Conversely, if inflation again exceeds expectations, markets may reassess how long rates will remain at elevated levels, or even raise expectations for a more restrictive policy path.

Source: TechFlow