November CPI - Unexpected Deceleration

Note: This morning, the Bureau of Labor Statistics (BLS) released the November CPI report on a delayed basis following the government shutdown.  BLS did not collect survey data for October 2025 and was unable to collect these data retroactively.  As a result, there is no CPI data for October 2025 and no month-over-month growth rates reported in November 2025.   

November inflation unexpectedly decelerated following months of stubborn price pressures.  In November, consumer prices as measured by CPI, rose 2.7% compared to a year ago, down from +3.0% in September and below all estimates.  Core CPI (“underlying inflation”; excludes volatile food and energy prices) rose 2.6%, down from +3.0% in September and below median forecasts for the same – this was the lowest core reading since March 2021.  Despite numerous caveats related to data collection during and following the government shutdown, the report offers hope that inflationary pressures could be easing after remaining stuck in a narrow range since early this year.   Last week, the FOMC lowered interest rates for a third straight meeting to guard against additional deterioration in the labor market.  It is unclear how the report will influence Fed policymakers who remain divided on the course of interest rates in 2026.

•  Consumer prices (CPI) increased 2.7% year-over-year. In November, the consumer price index (CPI) increased 2.7%, down from 3.0% in September and below expectations +3.1%.  The cost of used vehicles (+3.6%), medical care services (+3.3%) and shelter (+3.0%) were key contributors to the overall increase, offsetting slower growth in gasoline prices (+0.9%).  Core CPI (excludes food and energy) increased 2.6% year-over-year, down from +3.1% in September and below expectations for the same.