When the federal government finally released the Consumer Price Index for November, the headline was that inflation had cooled to 2.7% from a year earlier-an unexpected drop that came after a 43-day shutdown that many analysts say may have distorted the data.
Inflation Cooling Amid Shutdown
The Labor Department reported Thursday that the CPI rose 2.7% in November from a year earlier. Year-over-year inflation remains well above the Federal Reserve’s 2% target. The report, delayed eight days by the shutdown, was the first look at CPI since the September numbers were released on Oct. 24.
Consumer prices had risen 3% in September from a year earlier, and forecasters had expected the November CPI to match that year-over-year increase.
Experts Question Reliability
Diane Swonk, chief economist at KPMG, said, ‘It’s likely a bit distorted.’ She added, ‘The good news is that it’s cooling. We’ll take a win when we can get it.’ Swonk noted that the data is truncated and that the shutdown may have contributed to a cooling in prices.
Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, warned that the November numbers were “noisy… The canceling of the October report makes month-on-month comparisons impossible, for example, while the truncated information-gathering process given the shutdown could have caused systematic biases in the data.”
Many economists do not expect a reliable read on inflation until next month, when the Labor Department releases CPI numbers for December.
Core Inflation and Energy Prices
Energy prices, driven up by sharply higher fuel oil prices, rose 4.2% in November. Excluding volatile food and energy prices, core inflation rose 2.6%, compared with a 3% year-over-year gain in September and the lowest since March 2021.
Tariffs and Fed Policy
U.S. inflation remains stubbornly high, partly because of President Donald Trump’s decision to impose double-digit taxes on imports from almost every country on earth along with targeted tariffs on specific products like steel, aluminum and autos. The president’s tariffs have so far proved less inflationary than economists feared, but they do put upward pressure on prices.
The Federal Reserve last week decided to reduce the rate for the third time this year, but Fed officials signaled that they expect just one cut in 2026. Haigh said, ‘The Fed will instead focus on the December CPI released in mid-January, just two weeks before its next meeting, as a more accurate bellwether for inflation.’
Political Context and Public Sentiment
Trump delivered a politically charged speech Wednesday that aired live during prime time on network television, seeking to pin the blame for economic challenges on Democrats. The speech was a rehash of his recent messaging that has so far been unable to calm public anxiety about the rising cost of groceries, housing, utilities and other basic goods.
As the holiday season approaches, a new AP-NORC poll finds that the vast majority of U.S. adults say they’ve noticed higher than usual prices for groceries, electricity and holiday gifts. Roughly half of Americans say it’s harder than usual to afford the things they want to give as holiday gifts, and similar numbers are delaying big purchases or cutting back on non-essential purchases more than they would normally.
Corporate Impact: Wolverine Worldwide
Trump’s tariffs are taking a toll on companies like Wolverine Worldwide, which makes footwear brands like Merrell and Saucony. Facing extra tariff costs of $10 million this year and $55 million in 2026, the Rockford, Michigan, company had to increase prices between 5% and 8% on some products in June, and will have to raise prices again next year. It’s put a freeze on hiring and capital investments.
The company is getting squeezed even as it diversifies its sourcing network away from China, which now makes less than 10% of its products. During Trump’s first term, Wolverine shifted production to Vietnam. Now it’s moving to Bangladesh, Cambodia and Indonesia.
The problem isn’t just the cost of the tariffs. It’s the uncertainty caused by the unpredictable way that Trump rolls them out. Christopher Hufnagel, Wolverine CEO, said, ‘From a business leader’s perspective, it’s one thing if there’s bad news. Just tell me what the bad news is, and I’ll go work to try to solve for it. It’s the uncertainty of how it actually plays out that causes so much trouble because then we’re modeling all these different scenarios and it seems like things can change in the middle of the night.’
Key Takeaways
- Inflation cooled to 2.7% in November, but shutdown-related data truncation raises doubts about accuracy.
- Core inflation sits at 2.6%, the lowest since March 2021, while energy prices surged 4.2%.
- Trump’s import tariffs add pressure to prices and complicate Fed policy decisions.
The November CPI release offers a glimmer of cooling, yet analysts caution that the data may be distorted by the shutdown. As the economy heads toward the holiday season, consumers report higher prices and businesses face tariff-driven cost pressures, while the Federal Reserve watches closely for the next benchmark rate decision.
