The October inflation squeeze arrived Tuesday in two releases: consumer prices rose a seasonally adjusted 0.4%, above the 0.3% Dow Jones forecast, and a net 37% of NFIB firms plan to raise prices, the highest share since July 2022. Core CPI rose 0.3%, versus a 0.2% forecast, matching the “around 0.3” pace that Fed Governor Christopher Waller had said should leave a half-point December hike on the table. For SMB owners, food and energy costs are still firm, wage plans jumped, and markets fully price a quarter-point Fed increase on Dec. 8-9.
Updated November 10, 2026
Key Takeaways
- October CPI rose 0.4%, above the 0.3% forecast, and core CPI rose 0.3%.
- A net 37% of small firms plan price hikes, the most since July 2022.
- Compensation plans jumped to 24%, the highest reading since December 2025.
- Traders fully price a quarter-point Fed hike at the Dec. 8-9 meeting.
What did October CPI show?
As CNBC reported from the Bureau of Labor Statistics, headline CPI slowed from September’s 0.6% but still beat the forecast. The BLS published no yearly rate, because last year’s shutdown left no October 2025 comparison.
Food rose 0.5% and the energy index rose 0.7%. Shelter rose 0.3% and accounted for more than 30% of the headline increase. Electricity rose 0.9%. Transportation services rose 0.8%.
| Measure | October | Comparison |
|---|---|---|
| Headline CPI | 0.4% | Forecast 0.3%; September 0.6% |
| Core CPI | 0.3% | Forecast 0.2%; September 0.3% |
| Food | 0.5% | Snacks up 1%; beef up 0.9% |
| Energy index | 0.7% | Gasoline up 1%; natural gas down 0.8% |
| NFIB price plans | 37% | Up 6 points; highest since July 2022 |
Stocks fell and Treasury yields jumped. Traders fully priced a quarter-point hike for Dec. 8-9, and the CME FedWatch tool put half-point odds at 13.6%, from around zero before the report.
How does the October inflation squeeze affect pricing power?
TD Economics said the share planning price increases jumped 6 points to 37%, the highest since July 2022, while the share already raising average selling prices edged up to 33%. Optimism slipped 0.1 point to 97.8, a third straight decline and just below the 53-year average. Economists polled by The Wall Street Journal had expected 98.1, a Dow Jones report on Morningstar noted.
NFIB Chief Economist Bill Dunkelberg said, “There was little change in optimism among small businesses in October as owners navigated enduring challenges, though there were some encouraging developments.” Uncertainty fell 6 points to 84, the lowest since last December, still above the historical average of 68. A net 8% expect better business conditions, up 2 points. The sales outlook was unchanged.
In this analysis, pricing power looks thin: the highest price plans since July 2022 sit beside an unchanged sales outlook, even with September retail sales up 0.8%. Food and transportation services are the holiday costs those plans are trying to cover.
Are labor costs rising with price plans?
Hiring plans firmed in the same survey. TD Economics said the net share planning to increase employment rose 1 point to 18%, and unfilled positions climbed from 32% to 36%, both above their six-month averages. The net share raising compensation rose 1 point to 29%. Plans to raise compensation jumped 4 points to 24%, the highest since December 2025.
About 25% named labor quality or availability their top problem, down 1 point and first for a fourth month, the Dow Jones account said. Taxes were cited by 21%, up 10 points and the highest since May 2021, moving ahead of inflation into second place. In this analysis, pay raises and price hikes are one decision, not two.
What do higher rates mean for year-end financing?
The Fed held its benchmark at 3.75%–4% in October on a 10-2 vote. Traders fully price a quarter-point hike on Dec. 8-9, and CNBC said the inflation data may have sealed the deal.
Dallas Fed President Lorie Logan called the report “higher than expected” and said she sees a need for two more quarter-point increases, after which a pause would make sense in her view. TD Economics said the NFIB details reinforce the case for a December increase.
Higher rates already weighed: the credit-conditions outlook edged down 1 point and capital outlays 2 points, and investment plans were scaled back. Read that beside banks tightening small-business lending standards and the relief an expected Fed rate hold was framed as offering borrowers. In this analysis, Tuesday’s pricing took that pause out of the year-end base case.
- Price plans are at 37%, and the sales outlook did not improve.
- Compensation plans hit 24% as unfilled jobs rose to 36%.
- Credit and capital-outlay outlooks slipped as interest rates weighed.
Frequently asked questions
How much did October CPI rise?
It rose a seasonally adjusted 0.4%, above the 0.3% Dow Jones forecast. Core CPI rose 0.3%, versus a 0.2% forecast.
What share of small firms plan to raise prices?
A net 37% plan price increases, the highest share since July 2022, up 6 points. The share already raising prices edged up to 33%.
What happened to small-business optimism?
The NFIB index slipped 0.1 point to 97.8, just below its 53-year average. Uncertainty fell 6 points to 84, still above the historical average of 68.
Is a December Fed hike priced in?
Traders fully priced a quarter-point increase for Dec. 8-9. Half-point odds rose to 13.6% from around zero, CNBC reported via FedWatch.
