Infant formula jumped 5.1% in October, the biggest monthly increase in that grocery category ever recorded in federal data. A 12.4-ounce unit now runs about $22, up 4% over the past year. That's the number buried inside this week's inflation report, and it's the one that lands on a kitchen counter at 3 a.m.
The Bureau of Labor Statistics said consumer prices rose 0.4% in October, higher than economists predicted. Annual inflation climbed to 4% from 3.7% in September. It was the third straight month of outsized increases. Streaming services, beef, and auto insurance all got more expensive. Smartphones jumped 1.4%, the largest such increase on record. Televisions rose 3.3%, reversing the usual trend of prices falling over time.
Who Has the Power
The people who set the economy's temperature don't buy infant formula on a budget. They sit on the Federal Open Market Committee, and on Tuesday they spent the day debating how hard to squeeze. Chicago Fed President Austan Goolsbee called the data "borderline disturbing." Dallas Fed President Lorie Logan said she supported two additional quarter-point rate hikes and that the Fed could "move more rapidly this winter." Fed governor Christopher Waller said that if monthly core inflation hit 0.3% or higher, the Fed should consider a half-point increase, double the usual hike. Core inflation came in at exactly that.
The central bank held rates at about 3.9% in late October, after raising them a quarter point in September. Chairman Kevin Warsh declined to say whether more increases were coming. Wall Street didn't wait for an answer. Investors see 90% odds of a hike at the Dec. 8-9 meeting, and CNBC reported 15% odds of a half-point move.
Who Gets Crushed
The tool in the Fed's hands is borrowing costs. Goolsbee admitted the stakes himself: if consumers and businesses begin expecting hot inflation, cooling it becomes "much more painful." Painful for whom? Not for the officials drawing salaries to debate it. Logan listed what's rising: "visits to the doctor, childcare, dining out and hotel stays." Those are the things people can't skip.
Meanwhile, a National Federation of Independent Business survey showed a net 37% of businesses plan to raise prices in the next three months, the highest since July 2022. Businesses set prices; households absorb them. Matthew Shay, CEO of the National Retail Federation, said households are "managing budgets carefully, timing purchases around special offers and sales events in order to stretch their dollars." Retail spending grew 0.2% in October, the slowest monthly growth since November 2025. Furniture sales fell 0.2% in October and are down 2.6% over 12 months.
A New York Fed study found nearly 90% of tariff costs were passed on to U.S. importers, with about a quarter eventually reaching consumer goods prices and more pressure expected in 2027. Goolsbee said he hadn't seen tariff-driven price drivers fade as he'd hoped. Canada's ambassador Mark Wiseman, a former BlackRock executive, said tariffs raise the cost of capital. Trump defends them as protecting U.S. manufacturers and workers. Customs duties on imports from Canada reached $10 billion in 2025, compared with $400 million in 2024, per the Congressional Research Service.
The Reform Trap
Inflation and the cost of living were key issues in last week's midterm election, which produced one of the largest shifts of U.S. political power in recent history. Democrats say they'll challenge Trump's tariffs when they take control of Congress in January. By then the Fed will have met, and the rate hike machinery will already have turned.
Swap one set of managers for another, and the same apparatus keeps deciding. Officials debate quarter-points and half-points while a parent weighs a $22 can of formula. Nobody on that committee was elected by the people paying the bill.
- federal reserve
- inflation
- interest rates
- consumer price index
- austan goolsbee
- lorie logan
- bureau of labor statistics
- data centers