Inflation remains stubbornly high across the economy

October’s consumer price index report, out Tuesday, is chock-full of strong inflation numbers. And sometimes “strong” or “robust” isn’t good when it comes to economic data.

Headline inflation was up 0.4% month-over-month, down from September’s rate of increase, but still higher than economists expected. Core inflation rose 0.3%, same as September and also higher than expected.

There are no year-over-year inflation rates this month, because the Bureau of Labor Statistics didn’t publish them last year during the government shutdown. But economists are resourceful, and extrapolating from the numbers we do have, the best estimate is that headline inflation was approximately 4% year-over-year in October.

There’s almost nothing going in the right direction with inflation, said Andrew Davis, head of investment strategy at Bryn Mawr Trust.

“You had headline above expectation, core above expectation. Even core services excluding energy — that’s running a little hot,” he said.

Thomas Ryan, senior North America economist at Capital Economics, called it “a shocker of a CPI release.”

“Gasoline prices rose 1% on the month. We knew that would lift headline inflation. Why I describe it as a shocker is inflation pressures were a lot broader than energy,” he said.

The economy has been absorbing the surge in oil prices from the Iran war since early spring. But now?

“We’re getting more of the ‘bleed-through’ of the higher input costs into other costs in the economy,” said Boston College economist Brian Bethune.

Ryan at Capital Economics said that stems from the soaring cost of diesel, which is critical to the agriculture and transportation sectors. “That starts to feed through to higher prices on the shelves,” he said.

So in October, food inflation picked up. So did services.

“Vehicle insurance, hospital services, video and audio, which was driven by price increases for Disney+ and Hulu,” Ryan said.

In other words, the bleedthrough from high energy prices is now spreading to services that aren’t directly affected by the price of oil.

Ryan said this more generalized inflation reflects broader price pressures from a tight labor market, and overall strong demand from businesses and consumers.

That also gives businesses pricing power to sustain higher inflation, said Davis at Bryn Mawr Trust.

“First principles around it is, businesses are able to push through higher prices. So if they’re able to, they’re going to,” he said.

There’s also upward pressure on housing costs now, because of high mortgage rates, and the dearth of homes on the market, said U.S. Bank Chief Economist Beth Ann Bovino.

“Small supply for a new home to buy, where do they go next? To rentals, pushing those prices up as well,” she said.

With headline inflation now running at around 4%, and average annual wage gains just above 3%, Bovino said the typical consumer is falling behind with every paycheck they get.