October Inflation Exceeds Forecasts, Tests Waller’s Rate Threshold

U.S. consumer prices rose more than economists expected in October, with core inflation reaching a level Federal Reserve Governor Christopher Waller had said would lead him to support considering a larger interest-rate increase in December. The figures do not determine the Federal Open Market Committee’s decision, and Waller’s position is his own.

The Bureau of Labor Statistics reported that the consumer price index rose 0.4% from September, compared with the 0.3% increase economists had expected. Core CPI, which excludes food and energy, rose 0.3%, above the 0.2% forecast. Waller had said before the release that a core monthly increase of 0.3% or more would prompt him to support considering a 50-basis-point hike at the December meeting.

Waller said a 25-basis-point increase could put the Fed’s credibility at risk. He had also indicated he expected to support a rate increase even if the October inflation report showed improvement, with the size of the move depending on the data. Those remarks do not represent a decision by the full committee.

The October report showed varied movements across categories. Food prices increased 0.5% after staying flat in September, while energy...