Delayed CPI Lands Softer than Expected: Inflation Cools to 2.7% in November

CNBC, the New York Times, Axios, and Reuters contributed to this report.

After weeks of waiting (thanks to the government shutdown), the latest inflation snapshot finally dropped — and it came in cooler than Wall Street expected.

The Consumer Price Index rose 2.7% over the past 12 months in November, according to the Bureau of Labor Statistics. Economists surveyed by Dow Jones had been looking for 3.1%.

Even the “stickier” measure looked better than forecast: core CPI — which strips out food and energy — rose 2.6% year over year, below the 3% expectation.

On top of the lower annual numbers, price growth on a month-to-month basis was also mild:

• Headline CPI: +0.2% (vs. 0.3% expected);
• Core CPI: +0.2% (vs. 0.3% expected).

This report is messy by design. It’s the first CPI covering the shutdown period, and the shutdown disrupted data collection enough that:

• The October CPI report was canceled;
• The November release didn’t include the full usual set of data points;
• BLS said it couldn’t retroactively collect October data, though it used some “nonsurvey data sources” to complete calculations.

Translation: the headline is good, but economists may hesitate to call it a clean turning point.

A few key pieces inside the report:

• Food prices: up 2.6% over 12 months;
• Energy: up 4.2%;
• Shelter: up 3% — notable because housing costs have been a stubborn driver of inflation and shelter is roughly one-third of CPI’s weight.

Even with the caveats, investors treated the report like a relief valve. Stock futures popped after the data, and Treasury yields slipped.

The Federal Reserve already cut rates by 25 basis points earlier this month, its third cut in a row. Traders still weren’t betting heavily on another cut in January, but they nudged up expectations for a March cut — with CME’s FedWatch showing the implied probability around 58%, up from the prior day.

Bottom line: inflation looked calmer than expected, but with the shutdown distorting the normal CPI process, the next clean data prints will matter a lot more for proving whether this is a real cooldown — or just a statistical weird week.