Inflation unexpectedly dropped three-tenths of a percentage point to 2.7% for the year ending in November, according to an update to the consumer price index released Thursday by the Bureau of Labor Statistics.
Forecasters had expected that inflation would rise to 3.1%. Thursday’s report is the first after the end of the government shutdown, which caused key employment and inflation data to be delayed. The last report was for the month of September, as October’s report was canceled. The CPI’s release was closely anticipated by the Federal Reserve and investors.
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The lower inflation reading suggests that the price pressures from President Donald Trump’s tariffs were not as strong as originally feared, data that will undoubtedly be touted by the Trump administration, which has embarked on a historically aggressive tariff agenda.
Core inflation, a measure that strips out volatile food and energy prices, fell four-tenths of a percentage point to a 2.6% annual rate.
From September to November, prices rose 0.2%.
There has been some price relief on key food items.
For instance, the price of pork chops has fallen 6.3% over the past year, milk and egg prices have fallen on an annual basis, and the cost of cheese and related products has declined by 2.4% over the past year — all good news for consumers. The prices of certain fruits have also dropped from November of last year.
Still, some items are still far more expensive than a year ago.
Ground beef prices increased by nearly 15% in November from a year ago, according to the most recent consumer price index report. Uncooked beef roasts are up a painful 21.2% and steaks cost more than 14.7% more.
Energy prices have been difficult for some consumers. Electricity prices have gone up nearly 7% in the past year, although gasoline costs have not increased much since this time last year, which is good news for consumers.
This latest CPI reading adds to other economic data that has been trickling in since the government shutdown ended after a record 43 days.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index, showed inflation rising one-tenth of a percentage point to 2.8% for the year ending in September.
The Fed is closely tracking all of the inflation data, given it has a dual mandate: price stability and maximum employment.
Recent employment reports have shown job growth slowing. Still, underlying strength in the labor market has restrained the Fed from loosening monetary policy quickly.
The economy added 64,000 jobs in November, and the unemployment rate rose to 4.6%, the Bureau of Labor Statistics said Tuesday. Job growth in recent months appears to be running below the rate needed to keep unemployment from rising.
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The Fed last met earlier this month and decided to cut its rate target by another quarter of a percentage point. Still, most investors expect the Fed will hold rates steady at its next meeting in January, according to the CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.
Trump has been pushing the Fed hard to lower interest rates, and he will get the chance to nominate a replacement for Fed Chairman Jerome Powell next year, a replacement that will likely share the president’s vision for lowering the Fed’s rate target.
