US CPI rises 0.4% in October, exceeding forecasts; Fed rate hike seen as likely

US inflation rose 0.4% in October, above the 0.3% forecast, with core CPI also exceeding expectations. Markets now price a 98% probability of a Federal Reserve rate hike in December.

US inflation rose 0.4% in October, above the expected 0.3%, according to the Consumer Price Index data released by the Bureau of Labor Statistics. Core inflation, which excludes food and energy prices, also rose 0.3% – more than expected. The increase is particularly surprising given the drop in fuel prices in October, after a year of surges. Economists had hoped the decline would ease inflation, but other economic pressures remained strong. Due to the government shutdown last year, no annual inflation rate was published. This is the last inflation report before the Fed's rate decision in December. Following the data, interest rate futures show a 98% probability of a rate hike in the US in one month.