November CPI Drops to 2.7%, Giving Consumers a Breather Amid Holiday Discounts

November CPI falls to 2.7%, a relief for consumers amid a holiday‑discount‑heavy data set.

CPI Release After the Shutdown

The Bureau of Labor Statistics released its first inflation report since the government shutdown ended in mid‑November. The data collection period was later than usual, potentially incorporating holiday price reductions that could lower the overall figure.

Key Category Movements

The most noticeable easing occurred in food and shelter, the latter covering rent and mortgages. Food prices, which were rising at a 3.1% annual rate in September, slowed to 2.6% in November. Housing, which grew at 3.6% annually in September, decelerated to 3.0%.

Energy Prices Surge

Energy, however, climbed 4.2% over the past year. The electricity index rose 6.9% in the same 12‑month span, underscoring the sector’s continued volatility.

Market Reaction

The lower CPI sparked a surge in equity futures and a dip in bond yields. S&P 500 futures climbed almost 1% and Nasdaq 100 futures leapt more than 1.3% as of 8:40 a.m. ET.

Analyst Expectations

Dow Jones‑surveyed analysts had forecast a 3.1% rise in November’s inflation. The 2.7% reading was therefore broadly welcomed as good news for consumers.

Data Gaps and Analyst Sentiment

During the 43‑day shutdown, BLS staff could not gather all October data, leading the agency to forgo an October inflation report. JPMorgan analysts described the forthcoming release as “more uncertain” and “likely incomplete relative to prior releases.”

Fed’s Policy Outlook

Despite the October data gap, the Federal Reserve announced a quarter‑percentage‑point cut in borrowing costs last week. The decision reflected concerns about a weakening labor market.

Labor Market Update

BLS also released new employment data on Tuesday, showing a jump in October job cuts that pushed the unemployment rate to 4.6%.

Powell’s Comment on Inflation

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

Consumer Sentiment

An NBC Decision Desk poll released Sunday found that 44% of adults listed “inflation and the rising cost of living” as their top economic concern.

Key Takeaways

• November CPI fell to 2.7%, easing food and housing costs.
• Energy prices rose 4.2% year‑over‑year, with electricity up 6.9%.
• Markets reacted positively, with equity futures up and bond yields falling.

The CPI release, though tempered by holiday discounts and a missing October report, provides a cautiously optimistic picture for consumers and signals potential room for further Fed rate cuts. However, energy price spikes, tariff‑related inflation, and a still‑present labor‑market slowdown keep policymakers and investors on alert.