The latest Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics showed a slowdown in inflationary pressures during November, coming in better than market expectations.
The CPI rose 2.7% year over year in November, compared with analysts’ expectations of a 3.1% increase, according to Bloomberg estimates, reflecting a noticeable deceleration in inflation.
Meanwhile, core inflation, which excludes the more volatile prices of food and energy, recorded an annual increase of 2.6%, also below expectations that had pointed to growth of 3.1%.
This report represents the first inflation reading since September, after October’s data was canceled due to a government shutdown that lasted 43 days, preventing the availability of month-on-month price comparisons.
In September—the most recent month with available inflation data—both headline and core CPI recorded an annual increase of 3%.
The report is also expected to be the last major economic release published under an altered schedule imposed by the government shutdown, with economic data, including the monthly jobs report, set to return to their regular release timetable in the coming period.
The November jobs report, released on Tuesday, showed job creation exceeding expectations, while the unemployment rate rose to its highest level in four years.
The December jobs report is scheduled for release on January 9, 2026, returning to its usual Friday release.
In this context, Jeffrey Roach, Chief Economist at LPL Financial, stated:
“Inflation remains above the target level, but this situation is likely to be temporary. As demand cools over the coming months, pricing pressures are expected to ease, giving investors some breathing room.”
The Federal Reserve targets an inflation rate of 2%, as measured by the core Personal Consumption Expenditures (Core PCE) index.
The latest data for this index, released by the Bureau of Economic Analysis, showed prices rising 2.8% year over year.
For its part, Bank of America estimates indicated that goods inflation may remain “sticky” due to tariffs, while services inflation is expected to soften further, partly driven by lower health insurance costs.
This divergence among inflation components could prompt the Federal Reserve to adopt a cautious stance at its January meeting, as markets are currently pricing in only about a 25% probability of an interest rate cut at the next meeting.
The Fed’s latest projections indicated just one additional rate cut in 2026, after the central bank reduced rates by 0.25% in three consecutive meetings toward the end of 2025.
