US inflation higher than expected in October - here's what is happening with prices

Image source, Getty Images By Rachel Clun Business reporter Published 14 October 2026 Updated 7 minutes ago US inflation rose at a faster-than-expected pace in October, according to official figures.

Prices rose by 0.4% in the month, which was lower than the 0.6% increase in September.

However, analysts had expected prices to rise by 0.3%, and the higher-than-expected pace could add to arguments for the Federal Reserve to raise interest rates at its next meeting in December.

The new figures come a week after the midterm elections which were fought over cost-of-living pressures across the US.

Inflation is the rate at which the price of products or services increases over time.

For example, if a bottle of milk costs $1 but rises to $1.10 a year later, then annual inflation for bottled milk is 10%.

Officials from the Bureau of Labor Statistics measure inflation through the consumer price index (CPI).

It tracks the price changes of hundreds of day-to-day items including fresh food, gasoline and medical services to work out the overall level of inflation in the US economy.

The bureau updates this so-called basket of goods over time as peoples' spending and lifestyle habits change.

If demand for a product outstrips its supply, that can lead to producers raising prices - the craze for Labubu dolls in recent years and the high resale prices are an example.

Higher incomes can also lead to higher demand, for example, which in turn pushes up prices.

Image source, Reuters Supply can also affect inflation. If supply of a product is reduced, but demand remains constant, that can cause prices to rise. A good example of this is crude oil, which is used to make gasoline and diesel.

Before the US-Israel war with Iran began, it was trading at just over $70 a barrel, but when the conflict constricted crude supplies, the price quickly rose and is currently over $100.