The October 2026 Inflation Report

Published

November 10, 2026

Author

Joel Griffith and Gadai Bulgac

Topline

American families continue to lose ground as inflation extends its hot run. Since April, year-over-year prices have risen faster than paychecks, and the war-driven energy squeeze only adds to the inflation problem.

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Authors: Joel Griffith, Senior Fellow; Gadai Bulgac, Policy Analyst

Plymouth Institute for Free Enterprise · Institute for Statistical Policy Analysis

TOPLINE: American families continue to lose ground as inflation extends its hot run. Since April, year-over-year prices have risen faster than paychecks, and the war-driven energy squeeze only adds to the inflation problem.

BACKGROUND: The Consumer Price Index (CPI) rose 0.4% in October, an annualized rate of 4.9%, after rising 0.6% in September.

The 11-month change of 3.8% suggests a 4.2% year-over-year change, more than double the Federal Reserve’s “target”. Core inflation (excluding food and energy) rose 0.3% in October. (A 12-month-change is not available due to a lack of October 2025 data.)

Energy led October’s increase again, but inflation is across the board:

The Iran conflict and Strait of Hormuz disruption continue to hold energy costs up.
Gasoline, up 1.0% in October and 37.4% this past year, accounted for just 0.04 percentage points of October’s 0.4% increase.

Here’s what you need to know about October price increases:

Energy Heating and travel costs	Gasoline ▲ 1.0% Fuel oil ▲ 2.0% Airfare ▲ 0.4% Energy overall ▲ 0.7%
Groceries Food at home is up just 1.8%, but staples rise faster	Groceries ▲ 0.4% Meats ▲ 0.6% Baby Food ▲ 5.1% Fruits/vegetables ▲ 0.8%
Import-heavy goods Tariff pressure in household goods	Appliances ▲ 1.3% Toys ▲ 1.8% Televisions ▲ 3.3% Footwear ▲ 1.0%
Services Prices climbing here too	Rent ▲ 0.3% Auto repair ▲ 0.9% Water/sewer ▲ 0.6% Medical care ▲ 0.3%

Borrowing costs are missing from the headline. The CPI does not capture the impact of interest rates on the economy.

On a $400,000 30-year mortgage, the monthly payment has risen nearly 12% in a year, from $2,476 to $2,770, as rates climbed from 6.3% to 7.4%.

Real (adjusted for inflation) wages are shrinking. Real average hourly earnings increased by a minuscule 0.02% in October.

Since November of last year, real earnings declined by 1.1%.
- For a typical American worker, this represents over $800 in lost purchasing power.
Since April, year-over-year inflation has outpaced wage growth every month.

Figure 1: Wages have not kept up with inflation — Figure 1

AFFORDABILITY 101: A plan to bring prices down.

Eliminate tariffs. Pursue free trade with free peoples.
Win the war in Iran. End the threat of Iranian terror and reopen the Strait of Hormuz.
Get the fiscal house in order. Government spending bids up the cost of capital.
Cut regulations. Let the supply of goods and services expand naturally.
End the central bank’s ability to finance large federal deficits.

CONCLUSION: The conflict with Iran was not the beginning of inflation. From January 2025 through February, before Operation Epic Fury began, headline inflation averaged 2.8% annualized, while core inflation ran even hotter at 2.9%. Tariffs have further pushed up the prices of goods. Yet the principal force driving inflation over the longer term remains monetary policy. A long-term solution requires allowing a free market to expand the supply of goods and services while reining in government spending.