Inflation runs hotter than expected as higher prices extend beyond the
gas station
[November 11, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — U.S. inflation was higher than expected last month as
the rising prices that powered sweeping Democratic victories in last
week’s midterm elections appear likely to pose ongoing challenges for
the White House and the Federal Reserve.
The consumer price index rose 0.4% from September to October, the Labor
Department said Tuesday, down from 0.6% the previous month. The
government did not report a yearly inflation rate because last year's
government shutdown meant no data was released for October 2025.
But excluding the volatile food and energy categories, core prices rose
0.3%, the same as the preceding month. Both figures were a tenth of a
point higher than forecast, and at an annual rate would be well above
the Fed's 2% target.
The new inflation data heightened concerns that strong consumer and
business spending, combined with higher gas prices and supply
disruptions stemming from tariffs and global turmoil, are creating
increasingly stubborn inflation that could extend beyond temporary
spikes in prices at the gas pump. The economy expanded at a 3.4% annual
rate in the July-September quarter, mostly driven by consumer spending.
“It's worrisome. There is a sense that inflation is broad, persistent, a
little bit everywhere,” said Riccardo Trezzi, founder of Underlying
Inflation, a consulting firm, and a former Fed economist. “The Fed
should be very worried.”
Using rough estimates for last October's data, Trezzi calculates that
consumer prices rose 4% in October from a year ago, up from 3.7% in
September. Core prices rose 2.8%, he estimates, up from 2.6%.
Americans’ struggles with high prices were evident as they ousted
Republican majorities from the House and Senate last week. With historic
gains in both chambers, Democrats in Congress will soon face the same
challenges. President Donald Trump has acknowledged voter anger over the
Iran war and gas prices but has shown no sign yet of changing course.
The AP Voter Poll, a survey of 100,000 voters, found about two-thirds
blamed Trump’s policies for higher costs. About 9 in 10 said the cost of
living was a “crucial” or “major” factor in their vote.
Federal Reserve may become more aggressive about raising borrowing
costs
The persistence of elevated inflation makes it highly likely that the
Fed will raise its key interest rate at its next meeting in December. It
kept rates unchanged late last month, after raising them in September.
The Fed increases borrowing costs in an effort to cool spending and
bring down inflation.
Earlier Tuesday, Fed governor Christopher Waller, an outspoken member of
the central bank's rate-setting committee, said that a hike of a
half-point next month was possible, double the size of the usual
quarter-point increase.
“Economic activity is strong, the labor market is stable, but inflation
is too high, well above" the Fed's 2% goal, Waller said.
Stock prices fell in early trading Tuesday, and Treasury yields rose, on
expectations of more persistent inflation and higher rates from the Fed.
Higher gas prices may have begun to spread through economy
Gas prices rose 1% from September to October, the government said, a
stiff increase but still much lower than in previous months. Gas prices
have soared more than 37% from a year ago. Still, oil prices have fallen
sharply in recent days on hopes that the Iran conflict is fading, and
gas costs have declined this month.
[to top of second column] |
 Yet there are signs higher energy
prices are spreading into other parts of the economy, with air
fares, public transportation, and delivery services all jumping in
price. Electricity prices rose 0.9% from September to October, the
most since April, and grocery prices jumped 0.4%, a painful rise
after years of increases.
Beef prices rose 0.9% last month, after jumping nearly 14% in the
first half of this year. Restaurant prices rose 0.5% from September
to October, the most since January 2024. Rising shipping prices,
driven up by more expensive gas, have lifted costs for restaurants
and grocery stores, which may be passing them on to consumers.
Inflation has also been worsened by the massive investments flowing
into artificial intelligence, which has contributed to higher prices
for computer chips, electricity and consumer electronics. Voters
swept dozens of candidates into office who had pledged to slow data
center construction.
Computer prices jumped 0.5% last month, the government report
showed, after rising nearly 10% in the year ending in September,
lifted by more expensive chips. The cost of computers had been
retreating for years as semiconductor chips became more efficient.
That trend reversed course this year as prices rose sharply.
Prices are rising, and it's not just gasoline
Prices are also rising in some sectors that have little to do with
oil and gas or AI. Streaming video services have recently gotten
more expensive, with Disney raising prices last month for its
ad-supported Disney+ and Hulu streaming bundle to $12.49 a month
from $11.99. The ad-free version rose by $2.50 to $21.49.
Prices also increased last month for an Apple TV/Peacock streaming
bundle, to $17.99 from $14.99 a month.
Small businesses are bracing for a spending pullback by customers.
Chris Butler, CEO of National Tree Company, an artificial tree
importer and wholesaler, says most of his customers now spend $200
or less on a tree. That is a big departure from the pandemic days
when many people, flush with cash, were spending $300 to $400, he
said.
“Inflation continues to persist," he said. "Gas prices continue to
be high, so consumers are hurting from a discretionary perspective.”
Last year, National Tree was forced to raise prices on its products,
sourced in China and Cambodia, between 10% and 15% because of
Trump’s tariffs, Butler said. Tariffs have come down, but now the
firm is grappling with higher diesel costs.
Butler said the company, based in Cranford, N.J., doesn’t plan to
raise prices again this year given the existing financial stress on
customers, who are already spending less on trees.
Outside of inflation, other measures show the economy is largely
doing well. The unemployment rate is a low 4.1% and growth is
steady. Still, high prices have left most Americans with a dour view
of the economy.
“It might not be a recession, but if you’re still living paycheck to
paycheck and watching gas prices go up, grocery prices go up, your
rent costs go up, it’s not going to feel like a robust economy,”
said Jim Baird, chief investment officer at Plante Moran Financial
Advisors.
___
AP Retail Writer Anne D’Innocenzio in New York contributed to this
story.
All contents © copyright 2026 Associated Press. All rights reserved |
