U.S. Inflation Eases to 2.7% amid Shutdown Distortions
In November 2025, the U.S. Consumer Price Index (CPI) showed signs of cooling amid data distortions from a government shutdown, with the Bureau of Labor Statistics (BLS) reporting a 0.2% increase over the two months from September to November (no monthly data available for October).
The annual headline inflation rate eased to 2.7% from 3.0%, below economist expectations of 3.1%, reflecting a downward bias in the report due to missing observations.
The 43-day federal government shutdown prevented the BLS from collecting most price data for October, leading to the cancellation of the October CPI release and creating gaps that made the November report less reliable than normal.
The use of carry-forward methodologies, which assumed unchanged prices in October for surveyed data, together with delayed November collection concentrated in the second half of the month amid holiday discounts, injected a downward bias that likely understated underlying inflation pressures.
Key drivers of the reported inflation included tariff pass-throughs from imported goods and rising essential costs, though holiday discounts on apparel and appliances contributed to the moderation.
Core CPI, which excludes food and energy, rose 0.2% over the two months, bringing the annual rate to 2.6% (the smallest advance since March 2021) from 3.0% in September.
Price gains were noted in shelter (+0.2% over two months, +3.0% YoY), medical care (+2.9% YoY), household furnishings and operations (+4.6% YoY), and recreation (+1.8% YoY).
These were offset by softer increases in transportation services (+1.7% YoY) and declines in airline fares (- 5.4% YoY). The energy index rose 1.1% over the two months and 4.2% YoY, the largest since February 2023, driven by electricity (+6.9%), natural gas (+9.1%), and fuel oil (+11.3%), though gasoline edged up only 0.9% YoY.
The food index increased 2.6% YoY, with food at home up 1.9% (led by meats, poultry, fish, and eggs at +4.7%, and non-alcoholic beverages at +4.3%) and food away from home at +3.7%.
Grocery prices were mixed; cereals and bakery products (+1.9%) and coffee (+18.8%) rose sharply, while dairy products (-1.6%) and eggs (-13.2%) declined.
Although headline inflation moderated, the ‘delayed and patchy’ report riddled with gaps may understate pressures from Trump’s import tariffs and surging electricity demand from AI and data centers. The data supports a cautious Federal Reserve stance; after a 25bps rate cut last week to 3.50%-3.75% XRPUSD Falls to $1.80 in Broad Cryptocurrency Selloffs
