US October CPI Forecast Points to December Fed Rate Hike as Inflation Stays Stubbornly High

Economists expect US consumer prices rose 0.3% in October, a slowdown from September's 0.6% monthly surge, but inflation is forecast to remain well above the Federal Reserve's target, keeping the central bank on track to raise interest rates in December. A Reuters survey of economists projected headline CPI climbed 3.9% year over year in October, while core CPI, excluding food and energy, is seen up 0.2% for the month and 2.7% annually, a tick higher than September's 2.6% core reading.

Service-sector prices are expected to show particular stickiness, with owners' equivalent rent and hotel costs remaining elevated even as airfare costs likely eased. Joseph Brusuelas, chief economist at RSM, said the data would reveal "further evidence of stubborn and sticky inflation, especially in the service sector," and said he expected that to cement a December rate hike. The Fed held its benchmark rate steady at its October meeting, and financial markets were pricing in roughly an 85% probability of a hike in December as of Monday evening.