November Inflation Falls to 2.7% as Holiday Discounts Weigh In

November’s inflation rate slipped to 2.7% in a release that comes after a historic government shutdown, sending markets into a brief rally.

The CPI Release and the Shutdown Aftermath

The Bureau of Labor Statistics (BLS) announced on Thursday that the Consumer Price Index (CPI) for November was 2.7%. The data were collected later than normal, a timing that may have incorporated significant holiday discounting and could have applied downward pressure on the overall figure. The report was the first batch of inflation data published since the government shutdown, which ended in mid‑November.

BLS statisticians had to make a number of adjustments to generate many of the figures released Thursday. One of the adjustments involved reporting the change for October and November as 0.2%, a figure that the agency typically does not release. The omission of an October inflation report was confirmed by BLS, which explained that employees did not collect all the data needed during the 43‑day shutdown.

Easing in Food and Shelter, Surge in Energy

The most noticeable easing occurred in the food and shelter categories. In September, food prices were rising at a 3.1% annual rate; the Tuesday release showed that rate had slowed to 2.6%. Housing, which includes rent and mortgages, was increasing at an annual rate of 3.6% in September and had slowed to 3.0% in November.

Energy prices, by contrast, have surged. Over the last 12 months, energy prices have risen 4.2%. The index for electricity increased 6.9% over the same period, according to BLS.

Market Reaction and Potential Fed Moves

The data could be a green light for the Federal Reserve to continue cutting interest rates. Initially, stock futures surged and bond yields fell. At 8:40 a.m. ET, S&P 500 futures rose nearly 1% and Nasdaq 100 futures jumped more than 1.3%.

Analysts and economists surveyed by Dow Jones had expected inflation to rise to 3.1% in November, so the 2.7% figure was broadly considered good news for consumers. The release also came after the Fed announced a quarter‑point cut in borrowing costs last week, a move prompted by concerns about a weakening labor market.

On Tuesday, BLS released new employment data showing job cuts had jumped in October, pushing the unemployment rate up to 4.6%.

Public Concern and Political Commentary

Americans consistently report that inflation and everyday costs are the most pressing economic issues they face. In an NBC Decision Desk poll released Sunday, 44% of adults chose “inflation and the rising cost of living” as their top concern.

Asked about persistent inflation at a news conference in Washington, Federal Reserve Chair Jerome Powell pointed to President Donald Trump’s trade policy. He said, “It’s really tariffs that’s causing the most of the inflation overshoot.”

JPMorgan analysts had expected the report to be “more uncertain” and “likely incomplete relative to prior releases” because of the gap in October data. Brian Cheung and Jing Feng contributed to the analysis.

Key Takeaways

• November CPI fell to 2.7%, a drop from the 3.1% expectation.
• Food and shelter prices eased, while energy prices rose sharply.
• Market reaction included a rally in stock futures and a drop in bond yields.
• Public concern over inflation remains high, with 44% citing it as a top issue.
• The Fed’s recent rate cut and Powell’s comments highlight ongoing policy debates.

The release underscores the complexity of measuring inflation during periods of unusual economic activity and highlights the delicate balance policymakers must strike between supporting growth and curbing price pressures.