US inflation climbed 0.4% in October, yet falling gas prices handed American drivers their first sustained relief in months.
The increase from September to October came in slightly above forecasts but still marked a cooldown in the pace of price growth. The usual year-over-year figure was absent from the consumer price index because no data was gathered in October 2025 during the government shutdown. Filling that gap would put annual inflation near 3.9% for October, the highest reading since May, when it reached a 4.2% three-year peak.
Energy remains the driving force. Energy prices rose 0.7% in October after a steep 5.2% jump in September, with the pressure rooted in higher costs tied to the Iran war. Gas eased from an average of $4.41 a gallon at the start of October to $4.22 by month's end, and it slipped below $4 this week for the first time since July, though it still sits more than a dollar above last year's levels.
The Federal Reserve raised interest rates in September for the first time since 2023 and is expected to hike again at its December meeting, with inflation still far above its 2% target. Stronger-than-expected hiring and unemployment hovering just above 4% give policymakers room to keep tightening, even as cheaper fuel begins to blunt the pressure for consumers.