Minneapolis
CNN Business
 — 

Consumer prices rose 7.7% for the year ending in October, according to data released Thursday. The report was better than expected and surprised investors, with markets surging on the news. But the Federal Reserve still has far to go in its battle to tame inflation.

The Consumer Price Index, which measures the changes in prices for a variety of consumer goods and services, was lower than the 8.2% reading in September.

“Today’s CPI report shows inflation is moving in the right direction,” said Eric Merlis, managing director, co-head of global markets at Citizens. “The report provides ammunition for the Fed to begin pricing in sub 75-basis-point tightenings. This will be a welcome development for the Fed.”

On a monthly basis, prices rose by 0.4%. That’s on par with the previous month’s increase of 0.4%. Economists were anticipating the monthly figure to grow, given October’s surge in energy prices.

Still, there appeared to be some gains made in a measurement watched even more closely by the Fed: Core CPI, which excludes the more volatile categories of food and energy, was 6.3% for the year ended in October and down from the 6.6% increase posted in September.

Month-on-month, core CPI increased 0.3%. It had logged monthly increases of 0.6% in both August and September.

This story is developing and will be updated.