Inflation ticked up as voters cast ballots, but price growth for many basics remains steady

Price growth ticked higher in October as voters went to the polls in a presidential election where economic concerns proved decisive.

The consumer price index rose to 2.6% on a 12-month basis last month, the Bureau of Labor Statistics said reported Wednesday. That’s slightly warmer than September’s 2.4%, which was the slowest pace since President Joe Biden’s first full month in office.

“Core inflation,” a measure that excludes volatile food and energy prices, held at 3.3% over the 12 months to October, the same level as the previous month.

Markets reacted positively to the report as it eased some concerns about a stronger-than-expected reading. Equity futures edged higher, while traders bid up the price of government bonds.

Still, there are signs that progress in reducing inflation has stalled. Essential shelter costs rose 0.4% from September to October, accounting for more than half of the monthly gains, the BLS said. That category is still 4.9% more expensive than at the same time a year ago.

Voters vented their frustration over the cost of living last week by returning President-elect Donald Trump to the White House and Republicans to control the Senate.

Over the past four years, overall prices have risen around 20%, with the cost of many other goods and services rising even faster. While average wage increases continue to outpace price increases, leaving some households better off than before the pandemic, higher spending on everything from child care to home insurance has left many consumers tired and looking for change.

Food costs rose 0.2% in October, less than the 0.4% monthly increase in September, when eggs and dairy products still saw price increases, the BLS said. Spending on used vehicles rose 2.7% last month, while new cars were unchanged and apparel prices fell 1.5%.

Analysts had forecast the rise in used car prices, as well as hotel costs – which rose 0.4%, reversing a 1.9% drop in September – following the hurricanes that swept through the Southeast this fall.

Broadly speaking, however, the economy remains strong as President-elect Donald Trump prepares to retake the Oval Office. Many employers continue to hire, and healthy retail sales and increasing consumer confidence signal that households are willing to spend despite ongoing cost pressures.

October’s consumer price index provides a snapshot of the climate in which voters cast their ballots. Many did so out of longing for the economy that prevailed during the first Trump administration, exit polls show. Still, it is not clear that Trump will be able to repeat the steady growth and low inflation of the pre-Covid period, and many economists have warned that the platform he ran on this year would make inflation worse if implemented.

In the past week, investors have already started to sell off Treasuries because they believe Trump’s proposals, such as his plans for much higher tariffs and deeper tax breakscould trigger another round of price growth. When investors expect aggregate prices to rise, they sell bonds because their fixed payments become less valuable over time.

This divestment, in turn, has resulted in other loan costs, such as mortgage rates, to turn upward despite the Federal Reserve’s ongoing interest rate cuts.

At his press conference last week announcing a quarter-point interest rate cut, Fed Chairman Jerome Powell warned of further “bumps” on the road back to the central bank’s 2% inflation target. He declined to comment on what impact Trump’s policies might have, but indicated he would not leave his post. Trump has said he wants an unprecedented degree of input into Fed policy, which many analysts say would risk undermining the central bank’s longstanding independence.

So far, inflation in other key consumer purchases has remained subdued. Gas prices are about 30 cents lower than a year ago, a report Tuesday from Adobe Insights showed a direct drop in online food prices during the past year, which has not happened since January 2020.

Not all economists think inflation is poised to pick up again under the next administration, and some business owners don’t think Trump would be able to implement them as promised. However, others are already taking precautions after experiencing his first round of economic policies.

Estimates of the potential cost to consumers from the tariff proposal have varied, from as high as $7,600 per american household, according to the National Retail Federationto $1,700 for middle-income households, according to the pro-business Peterson Institute for International Economics.

Analysts with Citi Financial Group have said the cost increases from tariffs could end up representing only a one-time price increase of as much as 2% across the economy.

But they said such an outcome is far from guaranteed.

“While policies such as tariffs are likely to result in some months of stronger inflation, the overall size and timing of the impact on inflation from various policies remains highly uncertain,” the analysts wrote in a note this week.