11:22 AM EST, 11/13/2024 (MT Newswires) -- US consumer inflation rose in line with Wall Street's projections last month on both sequential and annual bases, boosting bets that the Federal Reserve will again cut interest rates by a quarter percentage point in December.

The consumer price index increased 0.2% in October, the same as it did July through September, the Bureau of Labor Statistics reported Wednesday. Annually, inflation accelerated to 2.6% from September's 2.4% pace. Both measures were in line with forecasts in a Bloomberg-compiled survey.

Core inflation, which excludes the volatile food and energy components, was unchanged at 0.3% in October from September, in line with analysts' estimate. At the annual level, core inflation came in at 3.3%, matching the Bloomberg consensus.

"Progress on the inflation front has slowed to a snail's pace in recent months as services inflation is looking increasingly sticky, while much of the disinflationary pressure from falling goods prices is now in the rear-view mirror," TD Economics Senior Economist Thomas Feltmate said in a Wednesday note. "All of this suggests that the last leg lower on returning inflation to the Fed's 2% target is going to occur much more gradually."

The Fed's monetary policy setting committee lowered interest rates by 25 basis points last week, following a 50-basis-point cut in September. Market bets for another quarter-percentage-point reduction at the Federal Open Market Committee's December meeting climbed to 79% on Wednesday from 59% on Tuesday, according to the CME FedWatch tool. The remaining odds are for the policy to remain unchanged.

Monthly food price growth cooled to 0.2% from 0.4% in September, while energy prices were flat after declining 1.9%, the BLS report showed. A pullback in gasoline prices was offset by a 1% month-to-month increase in electricity costs, Feltmate said. Annually, food prices increased by 2.1% while the energy index dropped 4.9%.

Shelter cost growth accelerated to 0.4% in October from 0.2% the month prior and rose 4.9% on an annual basis. Shelter accounted for more than half of the overall monthly increase, the BLS reported. Used cars and trucks, airline fares, medical care, and recreation saw prices rise month to month, while apparel, communication, and household furnishings were among the categories that saw prices cool, the BLS wrote.

"On a year-ago basis, services prices are up 4.8% or roughly two percentage points above its pre-pandemic pace of growth when inflation was running closer to 2%," Feltmate said.