U.S. consumer prices climbed at a slower-than-forecast pace in November, rising 2.7% from a year earlier amid signs that inflationary pressures might be easing, though experts urged caution due to data disruptions from a lengthy government shutdown.
The Bureau of Labor Statistics report, released Thursday after a delay, showed the consumer price index below the 3.1% annual increase anticipated by economists surveyed by Dow Jones. A core measure excluding food and energy advanced 2.6% over 12 months, cooler than the expected 3%.
Monthly gains also fell short of projections, with both headline and core indexes up 0.2% versus estimates of 0.3%. Over the two-month period from September to November, prices rose 0.2%, averaging 0.1% per month.
The report marks the first inflation snapshot covering the federal funding lapse that ran from October 1 through November 12, lasting 43 days and hampering data collection efforts. The October CPI was scrapped entirely because retroactive data collection proved impossible, though the agency tapped some non-survey sources for calculations.
November surveying began late on November 14, two days after the shutdown ended, with extra hours allocated to catch up. The absence of full October figures prevented many category-level monthly changes from being computed.
Year-over-year, food costs increased 2.6% and energy costs 4.2%. Shelter expenses, comprising about a third of the index, rose 3%, showing movement toward the Federal Reserve’s 2% target after previously driving higher readings.
Economists expressed skepticism about interpreting the figures as a genuine slowdown.
“It’s hard to read too much into the November inflation data. The shutdown clearly had a big impact on data collection,” wrote Heather Long, chief economist at Navy Federal Credit Union, per CNN. “Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”
“I don’t take it at face value,” Stephanie Roth, chief economist at Wolfe Research, told CNN. “It seems like the government shutdown had a big impact.”
Wells Fargo economists advised to “take it with the entire salt shaker,” predicting noisy data for at least another month or two and a likely price rebound in the December report due on January 13, CNN reported.
“That was one flawed report,” said Joe Brusuelas, chief economist at RSM US, pointing to anomalies like near-zero changes in rents and owners’ equivalent rent that “just doesn’t pass the smell test.”
The CPI, tracking average price shifts for a broad array of goods and services, has gained prominence amid new tariffs, labor market instability, and lingering high costs burdening households.
The White House hailed the numbers.
“Just as President Trump told Americans last night: inflation continues to fall, wages continue to rise, and America is trending towards a historic economic boom,” press secretary Karoline Leavitt said in a statement, per CNN.
Markets reacted positively, with S&P 500 futures gaining about 0.5% by 8:39 a.m. Eastern, poised to end a four-day slide. The 10-year Treasury yield dipped to around 4.11%, CNBC reported.
The report arrives as investors scrutinize clues on Federal Reserve actions. The central bank recently trimmed its key rate by 25 basis points for a third consecutive time.
“A tame CPI will reinforce the Fed is focused on protecting the employment market. And that means a Fed ‘put’ is now in place for the economy,” Tom Lee, head of research at Fundstrat, said in a note, per CNBC. “In other words, if the Fed is concerned about downside risks to the economy, the Fed ‘put’ comes into play and this would be for stocks to rise.”
While the chances of a January cut stay slim, the CME Group’s FedWatch tool indicated a 58.3% probability for March, up from 53.9% the prior day.
