The U.S. Consumer Price Index rose 0.4% in October, exceeding expectations after a 0.6% increase in September. The latest increase maintains upward pressure on prices and reduces the likelihood that annual inflation will be at or below 3.2%. Markets now expect higher annual inflation figures, with increased odds of inflation exceeding 3.6%. The absence of prior-year data following last year’s government shutdown complicates the assessment of annual inflation and may require the Bureau of Labor Statistics to use alternative methodologies. Federal Reserve and Open Market Committee communications will be closely watched for indications of a potential interest rate hike in December.
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