Costs for goods and services rose more than expected in October, providing fresh warning signs for the Federal Reserve in its fight to lower inflation.

The consumer price index, a broad gauge of costs across the U.S. economy, increased a seasonally adjusted 0.4% for the month, the Bureau of Labor Statistics reported Tuesday. Economists surveyed by Dow Jones had been looking for a 0.3% increase.

Stripping out volatile food and energy, so-called core CPI increased 0.3% against the forecast for a 0.2% gain.

The headline CPI had increased 0.6% in September while core was up 0.3%.

The BLS did not estimate a yearly rate. The government shutdown last year prevented the bureau from collecting sufficient data in October 2025, so there is no comparable figure to use. However, the report did include annual figures for some individual items where it was able to collect data.

Stock market futures drifted lower following the release while Treasury yields jumped. Traders fully priced in a quarter percentage point increase when the Fed next meets Dec. 8-9 and put odds of a half-point hike at 13.6%, according to the CME Group's FedWatch tool.

The report comes at a critical juncture for the Federal Reserve as it considers its next move regarding interest rates. At its October meeting, central bank officials voted 10-2 to keep their benchmark rate in a range between 3.75%-4% while awaiting incoming data.

"This was the report the market could least afford to see," said Karen Manna, fixed income investment strategist at Federated Hermes. "A hotter inflation print raises fresh questions about whether the Fed has done enough to contain price pressures and reinforces the risk that interest rates need to move higher and stay there for longer."

Though gasoline prices have been falling in recent weeks, the energy index rose 0.7% and the gasoline index was up 1%. The natural gas index, though, was off 0.8%.

Food costs accelerated 0.5%, pushed higher by increases of 1% for snacks, 0.9% for beef and 0.5% for meats, poultry, fish and eggs. Transportation services jumped 0.8%. New vehicle prices increased 0.2% but used cars and trucks fell 1.2%.

Shelter costs were higher by 0.3%, which the BLS said accounted for more than 30% of the headline increase.

Apparel, a tariff-sensitive sector, rose just 0.1%. Medical care commodities prices increased 0.5%. Airline fares accelerated 0.4%.

Markets already had been expecting the Fed to hike its benchmark borrowing rate next month, but the inflation data may have sealed the deal.

Speaking Tuesday morning in London ahead of the CPI release, Governor Christopher Waller said a hot inflation report could push him toward advocating for a half-point increase in December. Waller added that it's important the Fed follow through on expectations for a hike.

Despite the moderating gas prices recently, Fed officials have expressed concern that the impacts from the Iran war and President Donald Trump's tariffs are becoming embedded in the economy. Inflation has been running above the Fed's 2% target for some 5½ years.

In addition to tariffs and the war, inflation has been pressured by hyperscaler spending in the artificial intelligence buildout. Electricity prices rose 0.9%, a potential complication from the AI story.

Consumers, though, continue to spend — retail sales rose 0.8% in September, according to the Commerce Department — and businesses are still raising prices.

A net 37% of businesses responding to the October National Federation of Independent Business survey reported that they plan to raise prices in the next three months, the highest level since July 2022.