The U.S. Bureau of Labor Statistics reported Thursday that consumer prices rose at an annual rate of 2.7% in November, significantly cooler than economists had forecast.
Updates to the consumer price index (CPI) did not include a monthly inflation reading for October, due to the federal government shutdown and the agency’s stated inability to retroactively collect October survey data.
The shutdown may have further distorted Thursday’s inflation print, as data collection on consumer prices only resumed after the government reopened on Nov. 12, coinciding with the annual launch of holiday shopping deals on a swath of consumer goods and services.
“Overall, this gives the data less reliability that inflation is truly on a sustained downward path,” wrote Mortgage Capital Trading, a capital markets advisory firm, in a note to clients.
Economists polled by Dow Jones had expected a 3.1% annual rise in inflation.
Prices across all categories rose just 0.2% from September, after gaining 0.4% from July to August and 0.3% from August to September.
Excluding volatile food and energy prices, core CPI posted 2.6% annual growth in November, the lowest annual reading since March 2021 and notably cooler than the 3% year-over-year rise in September and 3.1% annual growth in July and August.
On a monthly basis, core CPI rose 0.2% from September to November, accounting for the shutdown, matching September’s gain but slightly lower than 0.3% increases in July and August.
Lisa Sturtevant, chief economist at multiple-listing service Bright MLS, called the unexpected price slowdown “good news for consumers” in an email to Scotsman Guide, but emphasized the need for additional months of data showing consistent progress on inflation.
“If inflation is truly moving lower, the Fed may reconsider its rate cut strategy and we could see more cuts and lower mortgage rates in 2026,” she said.
The pace of inflation in November remained well above the Federal Reserve’s stated target of 2% annual growth.
In recent months, policymakers at the U.S. central bank have grown increasingly divided on the appropriate path for monetary policy heading into 2026, split between concerns of a weakening labor market and above-target inflation.
Sam Williamson, senior economist at title insurance giant First American Financial Corp., said the shutdown “complicates interpretation” of November inflation data in commentary shared with Scotsman Guide.
“That uncertainty leaves the Federal Reserve inclined to treat the report cautiously and wait for cleaner data before determining its next policy move,” said Williamson.
The Federal Reserve’s next decision on interest rates is scheduled for the end of January.
A 4.2% annual rise in energy prices drove last month’s inflation increases, in addition to shelter costs that rose 3%. Prices for groceries and new cars decelerated year over year.
