Inflation likely took a breather last month as fuel prices fell

Americans are tired of inflation, as last week’s election results showed, but there may have been some relief last month as gasoline, diesel and jet fuel prices eased.

The consumer price index, which is scheduled for release at 8:30 a.m. ET on Tuesday, is expected to show an increase of 0.3% month-over-month, according to a survey of economists conducted by Bloomberg. Economists also project that so-called core inflation, which does not include food or energy prices, rose 0.2%.

In September, the CPI report showed prices grew 0.6% from August along with a 3.7% increase from a year earlier. (The October data will not include a year-ago number after the U.S. government shutdown disrupted the agency’s data collection, forcing it to skip the October 2025 CPI report entirely.)

Even with some relief, the October data is set to illustrate the price pressures on consumers — a big factor in the Democrats’ sweeping victories in the congressional midterm elections last week. Eighty-four percent of voters told NBC News’ Exit Poll that they believed higher prices were a result of President Donald Trump’s policies, and 39% said the economy was their No. 1 issue at the ballot box, according to the exit poll.

Those policies include global tariffs that add to the cost of products imported into the United States, as well as the war in Iran. Launched in February, that conflict has driven regular gas prices up 40%. Diesel fuel prices are 70% higher than at the start of the year.

That, in turn, pushed inflation higher across the U.S.. Economists have warned that the rise in this commercial fuel can quickly ripple across the economy. Diesel is a major input cost for the transportation industry that delivers goods, such as groceries, to store shelves around the world.

Gas prices declined last month, as Americans either voted early or geared up to cast their ballots on Election Day. On Oct. 1, the AAA national gas price average was $4.41 per gallon. At the end of the month, it was $4.18, a more than 5% drop.

As a result, Citigroup economists predicted that Tuesday’s data will show “stabilizing and falling airfares, and limited pass through of higher energy costs into goods prices.” They also said shelter inflation and services prices could also show some slowing.

Gas prices have continued trending downward in November, falling to $4 on Monday — although it’s still significantly higher than before the Iran war.

Even as the oil price surge takes a breather, it may not last long. Throughout the Iran war, countries that are members of the International Energy Agency have released 400 million barrels of crude and related products, such as diesel, into the global market. “Restocking those inventories will create a floor under prices once the current conflict in the Middle East has faded,” said Diane Swonk, chief economist at KPMG.

Given inflation’s overall stubbornness, economists believe the Federal Reserve will remain on track to hike rates for the second time this year. The Fed’s next two-day interest rate meeting will take place Dec. 8-9, right before the next inflation reading on Dec. 10.

Market odds for a December hike sat at 85% Monday afternoon.

“Still, details of Q4 data will be important for shifting inflation risks into 2027,” Citi economists wrote.

Bank of America economists agreed, predicting that the report would be “a cooler start to fall,” after multiple months of rising inflation.

Meanwhile, AI is also stoking inflation in other parts of the economy. In August, JPMorgan estimated that memory costs were on track to rise more than 400% from the end of 2024 through the end of 2026.

Tech companies are spending hundreds of billions of dollars on data centers and the equipment that fills those facilities, pushing memory prices higher. Those costs are being passed down to consumers. Consumer tech companies, including Apple, have raised their prices as a result.

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