Housing is now 30% of inflation: prices increased faster than expected in October in the United States, the Fed will soon anger Trump

Bad news for the American Federal Reserve (Fed) and for Americans. According to figures published this Tuesday, November 10, consumer prices increased by 0.4% in October over one month, more than the 0.3% anticipated by economists. This acceleration confirms the persistence of inflationary tensions in the world's largest economy.

Above all, underlying inflation, which excludes volatile energy and food prices, stood at 0.3% over one month, compared to 0.2% expected. This is the third consecutive month that this indicator has increased by 0.3%. A persistence which complicates the task of the Fed, responsible for bringing inflation sustainably towards its objective of 2%.

Inflationary pressures remain widespread in the American economy. Prices continue to rise in particular in leisure, medical care, car insurance, furniture and education. Housing alone constitutes more than 30% of the monthly increase in the consumer price index.

Housing represents more than 30% of the price increase. This diffusion of price increases is particularly worrying for those responsible for monetary policy. It suggests that inflation is not limited to a few volatile items, but continues to affect a large part of American household spending. The publication of these figures could lead the Fed to further tighten its monetary policy.

To the great dismay of Donald Trump who has opposed rising interest rates since his arrival at the White House. Fed Governor Christopher Waller had raised the possibility of a 50 basis point hike in December if underlying inflation reached a certain threshold. However, according to Bloomberg, the October figures meet precisely this condition.

For Ira Jersey, chief strategist for US rates at Bloomberg Intelligence, the persistence of inflation now makes a 50 basis point increase in December credible. And this tightening could continue: if the Fed actually raises its rates by half a point next month, a further increase in March seems extremely likely. The question now facing investors is no longer just whether the Fed will increase its rates in December, but by how much.

Machine-translated from French