Inflation cooled to 2.7% in November, falling short of economists’ expectations and offering what could be welcome news for Americans struggling with high costs.
The consumer price index rose 2.7% over the past 12 months, according to the Bureau of Labor Statistics, down from 3% in September. Economists surveyed by Dow Jones had expected a 3.1% reading.
Core inflation, which excludes food and energy, dropped to 2.6% annually—the lowest rate since March 2021, before prices started their historic surge.
But there’s a catch: The numbers come with a big asterisk.
The Shutdown Problem
The 43-day government shutdown that ended in mid-November left the Bureau of Labor Statistics unable to collect most price data for October. The agency couldn’t retroactively gather that information, leaving economists without the usual monthly comparison points.
Data collection for November didn’t start until November 14, meaning the report captures roughly two weeks of prices rather than a full month. That timing could have captured more Black Friday and holiday discounting than usual.
“It’s hard to read too much into the November inflation data. The shutdown clearly had a big impact on data collection,” Heather Long, chief economist at Navy Federal Credit Union, said in a statement to CNN.
Federal Reserve Chair Jerome Powell cautioned last week that the November figure deserved skepticism, given how federal staffing issues affected data collection during much of the month.
What the Numbers Show
Despite the data concerns, the report showed prices rising 0.2% over the two months from September to November—an average of 0.1% per month. That’s down from the 0.3% monthly increase in September.
Shelter costs, which make up a large chunk of the inflation index, slowed dramatically. Housing prices rose 3% annually in November compared to 3.6% in September.
Energy prices jumped 4.2% over the past year, driven largely by electricity costs up 6.9% and natural gas up 9.1%. But gasoline prices rose just 0.9% annually.
Food costs climbed 2.6% over the year. Specific categories showed wide variation:
- Ground beef up 14.9%
- Coffee up 18.8%
- Eggs down 13.2% as avian flu supply shortages eased
- Dairy products down 1.6%
Markets React
Stock futures surged on the cooler-than-expected inflation reading. The S&P 500 futures rose nearly 1%, and Nasdaq 100 futures jumped more than 1.3% as investors saw potential for more Federal Reserve rate cuts ahead.
The Fed cut rates by 25 basis points earlier this month for the third consecutive time. The November CPI data suggest policymakers could continue that path into 2026.
“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.
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