U.S. Inflation Slowed to 2.7% in November as Shutdown Distorts Data

Headline CPI figure shows a modest decline

The Bureau of Labor Statistics announced that the consumer price index (CPI) rose 2.7% year‑over‑year in November, down from the 3.2% increase recorded in October. The slowdown marks the first sub‑3% reading since early 2022 and suggests that price pressures may be easing.

Government shutdown hampers data collection

Economists warned that the recent federal government shutdown created gaps in the CPI survey methodology. With several regional offices closed and field staff furloughed, sample sizes were reduced and some price observations were delayed. The resulting data “noise” could mean the 2.7% figure is not a fully reliable gauge of underlying inflation trends.

Implications for the Federal Reserve

The distorted CPI reading adds uncertainty to the Federal Reserve’s policy calculus. While a slower inflation rate would normally give the Fed room to pause or even cut rates, the lack of clean data makes it harder to assess whether the slowdown is genuine or merely an artifact of the shutdown.

Labor market shows signs of cooling

At the same time, the labor market is beginning to lose steam. Weekly jobless claims have ticked upward for three consecutive weeks, and wage growth has decelerated to its slowest pace in more than a year. “We are seeing a subtle but noticeable softening in hiring activity,” said a senior economist at a major research firm.

Outlook

Analysts caution that policymakers will need to balance the ambiguous inflation data against the emerging weakness in employment. If the trend toward lower price growth persists and the labor market continues to cool, the Fed could consider a more dovish stance later this year. Conversely, if the shutdown‑induced data gaps prove significant, the central bank may adopt a wait‑and‑see approach until more reliable numbers become available.