Inflation cooled in November after September peak

The pace of annual inflation slowed in November, after hitting its highest level of the year in September, according to data released Thursday by the U.S. Bureau of Labor Statistics (BLS).

The BLS’ Consumer Price Index showed that overall inflation rose to an annual rate of 2.7% in November, down from a rate of 3.0% in September. Compared to the last CPI release from September, the all-items index rose 0.2% on a seasonally adjusted basis. The BLS did not collect data on inflation in October due to the government shutdown.

On a yearly basis, the all-items less food and energy index was up 2.6%, with energy posting a 4.2% annual gain and the food index rising 2.6% on a yearly basis.

Compared to September, the all-items less food and energy index rose 0.2% on a seasonally adjusted basis, with energy rising 1.1% and food rising 0.1%.

“CPI inflation came in lower, especially rent data,” said Lead Analyst Logan Mohtashami. “Some people are suspicious of that, but a lot of us have suspected that CPI accounts for rents for years. The 10-year yield fell right after the report and stayed lower throughout the morning.”

The shelter index also recorded increases, rising 3.0% year-over-year and 0.2% from September. On a yearly basis, the index for rent of primary residences was up 3.0% and owners’ equivalent rent of primary residences up 3.4%.

“The drop in inflation in November is good news for consumers,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “Higher prices for energy drove inflation in November, but prices of other goods, including groceries and new vehicles, are down. Despite the promising movement on inflation last month, today’s report represents one data point, and we are going to need to see a few more months of CPI data to understand whether inflation is moving in the right direction.”

While the overall data from November does paint a better picture than the last CPI release, economists are not ready to celebrate.

“Missing October data means November’s reading may understate the true pace of inflation, leaving the underlying trend harder to discern,” Sam Williamson, a senior economist at First American, said in a statement. “That uncertainty leaves the Federal Reserve inclined to treat the report cautiously and wait for cleaner data before determining its next policy move.”

Sturtevant agrees, noting that the Fed will be closely watching the release of December’s inflation data before its next meeting.

“Inflation is going to be an important factor to watch in the 2026 housing market. If inflation ticks back up, it could create headwinds to market activity,” she said. “Higher inflation generally means higher mortgage rates. Inflation remains above the Federal Reserve’s 2% target, and concern about inflation is a key reason the central bank has signaled a pause in rate cuts, which could hold mortgage rates from moving lower or even lead to an increase in rates.”