The Bureau of Labor Statistics’ consumer price index (CPI) increased by 0.4% in October, the most in seven months. Economists surveyed by the Wall Street Journal and Marketwatch had predicted a 0.3% rise.
The CPI increase is mainly due to the increase in gasoline prices, which rose 3.7% last month. Energy as a whole rose by 2.7%. In early October, gas prices in California increased above $4, as multiple West Coast refineries had unexpected outages.
The cost of medical care also increased by 1% in October. Speaker of the House Nancy Pelosi is expected to bring a drug-pricing bill to the House floor in the coming weeks.
Food prices increased by 0.2% last month. The index for food at home rose by 0.3%, the largest increase since May, while food away from home increased by 0.2%.
The Federal Reserve has lowered interest rates several times since July, which often causes more consumer spending. Consumer spending increased by 0.2% in September due to purchases of automobiles and higher spending on healthcare. Consumer spending accounts for two-thirds of economic activity.
GDP grew by 1.9% in the third quarter of the year, at a better-than-expected rate. An increase in GDP also often causes inflation and an increase in prices.