Underlying inflation in the United States cooled significantly in November, with the Core Consumer Price Index (CPI) rising 2.6% year-over-year—the slowest pace since early 2021. This mark represents a notable drop from the 3% annual growth seen just two months prior. The broader headline CPI also moderated to a 2.7% annual increase.
Thank you for reading this post, don't forget to subscribe!However, the Bureau of Labor Statistics (BLS) noted that the report is clouded by the recent record-long government shutdown. Because October data collection was interrupted, the BLS reported a two-month core increase of 0.2%, driven by price drops in apparel and travel, though household goods continued to rise. While markets reacted positively with surging stock futures and falling yields, Federal Reserve officials remain cautious. Chair Jerome Powell warned that the shutdown has likely distorted the data, making it difficult to determine if this easing trend will influence future interest rate decisions.
Inflation Finally Chills Out—But There’s a Catch
Inflation just hit its lowest level since 2021, but the “how” is a bit messy. Core CPI (which ignores volatile food and energy costs) landed at 2.6% for November. On paper, that’s a huge win compared to the 3% we saw two months ago, and markets are celebrating with stocks trending up.
The catch? A record-long government shutdown meant the BLS couldn’t collect data in October. Instead of the usual monthly update, we got a two-month “best guess” showing a 0.2% rise. Prices for hotels and clothes fell, but your personal care products got more expensive. Fed Chair Jerome Powell isn’t ready to celebrate yet, calling the data “distorted.” With the Fed already cutting rates to save the job market, all eyes are on whether this cooling trend is real or just a statistical fluke.
Best for a quick briefing
- The News: Core CPI slowed to 2.6% in November (YoY), the lowest in over three years.
- The Trend: Overall inflation (Headline) hit 2.7%. Costs for hotels and recreation fell, while household goods rose.
- The Complication: Due to the federal shutdown ending Nov. 12, October data is missing. The BLS reported a 0.2% increase across a combined two-month window.
- Market Reaction: Bullish. Stocks rose; Treasury yields and the U.S. Dollar softened.
- The Fed’s Stance: Neutral. Jerome Powell warned the data is likely “distorted.” The Fed remains divided on 2026 rate paths after three consecutive recent cuts.
