Inflation Cools to 2.7%, Though Shutdown Gaps Complicate the Read

America’s inflation gauge just turned friendlier, but the signal comes with a big caveat. Consumer prices rose 2.7% year-over-year in November, down from September’s 3% pace and below expectations, while core inflation eased to 2.6%. However, since the 43-day government shutdown disrupted data collection through mid-November, investors are left wondering how clean this inflation reading really is.

• The shutdown forced the Labor Department to rely on alternative data collection methods, which economists say likely artificially pushed November inflation readings lower.
• UBS economist Alan Detmeister brushed off the report, saying, “You largely just put this one to the side” — calling most of the data “noise.”

Market skepticism runs deep: Regan Capital’s CIO Skyler Weinand said the data “may keep the Federal Reserve on hold for the foreseeable future,” but inflation is still above the Fed’s 2% target, pressured by Trump-era tariffs and sticky healthcare and housing costs. US Bank’s Beth Ann Bovino warned the labor market is becoming “increasingly stretched.” With tariff-exposed goods like clothing and coffee still rising, the inflation fight is far from over.