U.S. Says Inflation Slowed Last Month; Americans Aren’t Feeling It

• At a time when Americans are frustrated and angry over the high cost of living, the government released a report Thursday showing that inflation had cooled unexpectedly in November. But economists quickly warned that last month’s numbers were suspect because they’d been delayed and likely distorted by the 43-day federal shutdown. And most Americans have not felt any let-up in the high prices they are paying for food, insurance, utilities and other necessities.
• The Labour Department reported Thursday that its consumer price index rose 2.7% in November from a year earlier. Yet, year-over-year inflation remains well above the Federal Reserve’s 2% target. Americans, dismayed by high prices, handed big victories to Democrats in local and state elections last month.
• The inflation report was delayed eight days by the shutdown, which also prevented the Labour Department from compiling overall numbers for consumer prices and core inflation in October and disrupted the usual data-collecting process. Thursday’s report gave investors, businesses and policymakers their 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. Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, warned that the November numbers were “noisy … The cancelling 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 don’t expect to get a reliable read on inflation until next month, when the Labour Department releases CPI numbers for December. Energy prices, driven up by sharply higher fuel oil prices, rose 4.2% in November. Excluding volatile food and energy prices, so-called core inflation rose 2.6%, compared with a 3% year-over-year gain in September and the lowest since March 2021. U.S. inflation remains stubbornly high, partly because President Donald Trump decided to impose double-digit taxes on imports from almost every country on earth, along with targeted tariffs on specific products like steel, aluminium and autos.
• The president’s tariffs have so far proved less inflationary than economists feared. But they do put upward pressure on prices and complicate matters at the Fed, which is trying to decide whether to keep cutting its benchmark interest rate to support a sputtering job market or whether to hold off until inflationary pressures ease.

(Source: PBS News)