Slower US inflation leaves Waller’s half-point December hike in play

US monthly headline inflation slowed in October, but core prices rose 0.3% for a third consecutive month, matching the level Federal Reserve Governor Christopher Waller had associated with considering a 50-basis-point December interest-rate hike.

The Bureau of Labor Statistics reported on Nov. 10 that consumer prices increased 0.4% from September, seasonally adjusted, after September's 0.6% rise. Core CPI, which excludes food and energy, rose 0.3%. The agency did not publish headline or core year-over-year rates.

That leaves a policy tension beneath the slower headline figure. In prepared remarks earlier that day, before the release, Waller said core CPI around 0.3% or higher would warrant considering a 50-basis-point December hike if the report resembled the preceding two monthly readings. He had leaned toward 25 basis points under his expected outlook.

October's core reading matches that approximate level. The comparison does not establish Waller's assessment after the release or a decision by the Federal Open Market Committee.

Prices continued to increase in October, even though the overall monthly pace eased. Energy rose 0.7%, following a much larger 5.2% increase in September. Food prices also increased, with the index rising 0.5% in October.

Shelter increased 0.3% and accounted for more than 30% of the monthly headline increase, according to BLS.

The core result shows why the headline slowdown offers only part of the picture. Removing food and energy leaves the same 0.3% monthly increase recorded in August and September. There was no corresponding improvement in that monthly measure.

Price changes also varied across categories. Recreation rose 0.8% and motor vehicle insurance increased 0.7%, while used cars and trucks fell 1.2%. Those differences matter when assessing a report that combines slower overall inflation with continuing pressure in several components.

US inflation and Waller’s December outlook

Waller's remarks explicitly state that the views are his own and do not necessarily represent colleagues on the Fed Board or the FOMC.

Waller separately discussed personal consumption expenditures inflation, the measure targeted by the FOMC. The comparison with October's release concerns core CPI; the two measures should not be treated as interchangeable.

BLS did not publish October year-over-year changes for headline or core CPI. During the 2025 lapse in appropriations, the agency did not collect October 2025 survey data, leaving most series without the prior-year indexes needed for an annual calculation.

For Bitcoin readers, the immediate policy question is how officials assess persistent core inflation alongside the slower headline pace.

The next test is policymakers' post-release assessment and subsequent inflation evidence ahead of December. BLS has scheduled November's CPI report for Dec. 10 at 8:30 a.m. Eastern.