No Good Inflation News From October CPI

October's CPI report indicates that US inflation remains broadly above the Federal Reserve's 2% target, weakening hopes for a near-term disinflationary improvement.

• Headline CPI rose 0.35% in October, equivalent to a 4.3% annualized rate, while core CPI increased 0.30%, or 3.6% annualized.
• Energy prices rose 0.70% and food prices 0.47%, reversing some of the previous five months' moderation in food inflation and leaving energy costs elevated after Iran-related increases.
• Core goods prices increased 0.16%, core services excluding shelter rose 0.45%, and shelter costs rose 0.27%, compared with the roughly 2.5% services inflation rate consistent with a 2% overall target.
• Owners' equivalent rent rose 0.32%, while renters' rent increased 0.11%; Western Asset questions the imputed measure but says inflation would remain too high even without the rent increase.
• The article argues that tariffs and persistent labor-cost pressure provide incomplete explanations for current inflation, while recent fuel-cost increases appear to have passed through into broader prices.

Takeaway: The October data provide no clear source of relief for inflation, suggesting that investors should expect continued pressure on the Federal Reserve's path toward its 2% target.