US consumer inflation slowed unexpectedly in November, delayed government data showed Thursday, although levels remained higher than earlier in the year before President Donald Trump’s tariffs flowed through the economy.
Analysts warned that disruptions to data collection during the record-long US government shutdown, which ended in mid-November, had likely distorted the figures.
The consumer price index (CPI) climbed 2.7 percent from a year ago in November, the Department of Labor said, notably below analysts’ predictions of a 3.1 percent uptick.
The figure was also down from a 3.0 percent rise in September, the most recent month for which fuller data was available due to the shutdown.
White House National Economic Council director Kevin Hassett was quick to laud the figures, calling this “an astonishingly good CPI report” in a Fox Business interview.
But inflation has ticked up this year as Trump launched new tariffs on US trading partners, with many firms flagging elevated business costs.
The impact on consumers has been more muted, as companies rushed to stock up on inventory before steeper import prices kicked in. Many opted not to fully pass on the cost increases.
Americans nonetheless continue to voice concerns over affordability, with Democratic victories in off-year elections last month seen as a clear sign of the issue’s ongoing importance.
Food prices were 2.6 percent higher from a year ago in November, with the index for meats, poultry, fish and eggs up 4.7 percent over the period.
Energy costs jumped 4.2 percent over the past 12 months.
Excluding the volatile food and energy sectors, “core” CPI was up 2.6 percent in November from a year ago. Overall figures are still above the Federal Reserve’s longer-run target of two percent.
There were few month-on-month comparisons in Thursday’s report, as the shutdown from October to mid-November hampered data collection.
Heather Long, chief economist at the Navy Federal Credit Union, cautioned that with the 43-day government shutdown hitting data collection, “it’s hard to read too much into the November inflation data.”
“What stands out from the data that is in the report is utilities, home furnishings and used cars and trucks are driving some of the ongoing inflation pressures. This is the result of tariff pressures and the AI boom,” she said.
“Americans continue to feel the squeeze in their monthly budgets,” Long added.
The White House Council of Economic Advisers pointed to airfares and groceries as areas of improvement in a series of social media posts.
Yet, economist Samuel Tombs of Pantheon Macroeconomics flagged that a skew in data collection towards the end of November likely explained why airline fares were seen to slump.
“A higher proportion of price quotes than usual for November likely were sourced during the Black Friday discount period,” he cautioned.
Similarly, while housing inflation was “unusually weak in the two months leading into November,” this could be “more noise than signal due to the disruptions from the shutdown,” said Bernard Yaros of Oxford Economics.
While the latest figures will be scrutinized for their potential bearing on the Federal Reserve’s interest rate decisions, missing October data means an incomplete economic picture.
Even as the numbers are “encouraging” for the Fed, central bank chief Jerome Powell “has already warned against reading too much into the latest data due to distortions from the shutdown,” Yaros said in a note.
“The central bank will remain most vigilant about the labor market, as a continuation of real wage growth will allow households to fully recover from the hit to their purchasing power since the pandemic,” he added.
Fed policymakers have voted for three consecutive meetings to lower rates amid apparent weakening in the jobs market, but some cite risks of persistent inflation in urging caution before further reductions.
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