Prices ease amid data gaps
U.S. consumer prices rose 2.7% in the year to November, according to federal data released Wednesday, marking a slowdown from September’s 3% rate and undershooting economists’ expectations of about 3.1%. The data comes after the longest government shutdown in U.S. history disrupted economic reporting, leaving no official inflation figures for October and limiting data collection to the second half of November.
The latest Consumer Price Index suggests inflation pressures are easing, though analysts caution against drawing firm conclusions due to the unusual data collection period. Economists say holiday discounting and statistical adjustments may have contributed to the softer reading.
Trump touts falling prices
The inflation report followed public claims by President Donald Trump that prices were falling rapidly under his administration. In a televised address Tuesday night, Trump said he was bringing prices down “very fast,” despite evidence that inflation remains above the Federal Reserve’s 2% target.
The White House has continued to argue that current price pressures are a legacy of the previous administration. Trump reiterated at a recent rally that reducing living costs remains his top priority.
Jobs and prices send mixed signals
The inflation slowdown coincides with signs of strain in the labor market. The unemployment rate climbed to 4.6% in November, the highest level in four years. At the same time, job growth surprised to the upside, with 64,000 jobs added last month following a revised loss of 105,000 positions in October.
Economists note that the combination of easing inflation and rising unemployment complicates the outlook for policymakers, particularly as consumers remain sensitive to price levels following sharp increases in 2022.
Tariffs and affordability concerns
Many economists continue to link elevated prices to U.S. trade policy. Despite exemptions for certain goods, the effective tariff rate remains at its highest level since the late 1930s. Research from the Yale Budget Lab estimates current tariffs could raise household costs by roughly $1,700 per year on average.
Public opinion surveys suggest voters are increasingly attributing affordability challenges to the current administration, with inflation-related approval ratings weakening more sharply than views on other policy areas.
Federal Reserve faces balancing act
The Federal Reserve has cut interest rates three times this year in response to slowing growth but has resisted calls for deeper reductions. Rates currently sit between 3.5% and 3.75%.
Fed Chair Jerome Powell said policymakers remain focused on returning inflation to 2% while monitoring labor market risks. He added that November’s data would be reviewed cautiously due to disruptions caused by the shutdown.