The government’s delayed November inflation report seemed to bring relief at first: Consumer prices were up 2.7% from a year earlier, while core inflation eased to 2.6%, the lowest level in years. But many economists say the details—especially around housing, the biggest driver within inflation—don’t add up.
“This is a wacky number,” said Diane Swonk, chief economist at KPMG. She pointed to shelter costs, which appear to have barely moved because the index effectively repeated earlier data. “When housing is that large a component, that really matters.”
Several economists blame the distortion on the extended government shutdown, which disrupted the Bureau of Labor Statistics’ ability to gather price data through October and into November. When data collection resumed in mid-November, the agency couldn’t fully reconstruct what it missed. Instead, it used statistical workarounds—often “carrying forward” prior prices—that in practice treated some categories as though inflation had paused.
Housing looks especially affected. Shelter makes up more than 40% of core CPI, yet the report implies rents and owners’ equivalent rent were essentially unchanged in October.
“We expected it to cool,” Swonk said. “For this low level, it seems a little bit too much.”
She also warned the impact won’t necessarily stay contained to one month. “Because of the assumptions that were made in October, it literally anchors the index going forward,” she said. “It lingers.”
Other results in the report added to the concern. Gasoline prices—which Swonk said fell during the period—showed an increase on a seasonally adjusted basis. Daycare costs, often one of the fastest-rising service categories, unexpectedly declined.
Joseph Brusuelas, chief economist at RSM, wrote in a blog post that the November CPI should be read with unusual caution.
“This was one flawed CPI report,” he wrote, arguing it lacks the usual “breadth and depth” the agency typically provides.
With October price collection disrupted, Brusuelas said it’s difficult to know whether inflation truly slowed—or whether the data simply can’t capture the underlying movement.
“A quotient of humility is in order here,” he wrote. “Because of the flawed report, it is better to state forthrightly that we do not have sufficient sense of price movements over the past two months.”
Markets appeared to share that skepticism. A meaningful downside surprise in inflation would often trigger a strong market move—either a rally or a selloff depending on rate expectations. Instead, the response was modest: stocks edged higher and futures barely budged, suggesting many investors discounted the signal in the report.
On paper, the numbers support the Federal Reserve’s recent interest-rate cut and could bolster the case for another cut early next year. But both Swonk and Brusuelas cautioned against pulling firm policy conclusions from data shaped by missing observations and statistical patches.
“The Fed will take this with a grain of salt too,” Swonk said, noting policymakers were similarly careful with labor-market indicators affected by the shutdown. “The Fed isn’t oblivious to this. What’s hard is that we have less real-time information on inflation than we do on the labor market.”
That uncertainty is most visible in housing, where affordability remains strained even if inflation cools. Swonk emphasized that inflation and affordability aren’t the same. Home prices may be leveling off in some areas, but mortgage rates, insurance premiums, and utility bills continue to pressure households. She added that electricity and natural-gas prices—quiet for a long stretch—have started rising again, in part due to added stress on power grids tied to data-center expansion.
In a Wednesday evening address, President Donald Trump said he would soon announce “aggressive housing reforms,” and he highlighted his upcoming choice to replace Jerome Powell as Federal Reserve chair with someone more dovish.
Brusuelas said the larger message is that the inflation picture right now is less a win than a muddle.
“Noise rather than signal is the major takeaway from the November CPI report,” he said.
Or, as Swonk put it: “We knew to take the data with a grain of salt. This one, we might need more than a few grains of salt.”
