Inflation cools to 0.4% in October as gas prices slide

October inflation rose 0.4% from September, the slowest monthly pace in three months, as energy prices backed off. Core inflation, which strips out food and energy, climbed 0.3%. Both numbers from the Bureau of Labor Statistics landed above what economists had expected — they were forecasting 0.3% overall and 0.2% on core.

The report comes with a big hole: no year-ago figures. A government shutdown in October 2025 forced the BLS to cancel that month's inflation report, wiping out the annual comparison.

Gas did the heavy lifting on the slowdown. Prices at the pump slid from $4.41 a gallon on Oct. 1 to $4.18 by month's end, a drop of more than 5%. AAA data earlier Tuesday showed gas below $4 a gallon for the first time since July, and Brent crude briefly tumbled under $90 in early trading after hitting $118 on Oct. 30. Diesel tells a different story — it's running 70% higher than at the start of the year, a much steeper climb than regular gas, and it's a major cost for the trucks that stock grocery shelves.

Fed governor Christopher Waller had already raised the stakes hours before the numbers dropped, speaking at a central banking conference in London. He said he would still back a 25 basis point increase at the Fed's Dec. 8-9 meeting even if inflation improved, called September's data flatly bad with no silver lining, and warned that if core inflation came in at 0.3% or higher, a 50 basis point hike should be considered in December. September's inflation ran at 3.7% year-over-year.

The Fed hasn't moved by 0.50% since 2022 and usually prefers a run of smaller 0.25% hikes so it can watch how they land. Waller waved that off: hiking only 25 basis points would put the central bank's credibility at risk, a risk he said he isn't eager to take. Inflation hasn't touched the Fed's 2% target since early 2021.