US CPI Slips to 2.7% YoY in November – Inflation Cools, Data Gaps Spark Doubt, Labor Market Stays Tight and Yields Fall

Breaking: U.S. inflation slows more than expected in November; signals point to cooler prices ahead

The latest data from the U.S. labor department show that consumer prices rose at a slower pace in November than economists anticipated. The headline inflation rate slipped to 2.7% from a year earlier, while core inflation slipped to 2.6%, marking a multi‑year low as price pressures ease for the moment. Analysts warn that the government shutdown disrupted data collection, which could have biased the readings lower.

“the report wasn’t just noisy and full of gaps, it provided a downwardly biased perspective of inflation,” noted Gregory Daco, chief economist at EY‑Parthenon. “The bias stemmed from carry‑forward assumptions that kept October prices unchanged for all surveyed items, pushing inflation dynamics lower.”

In a separate signal, weekly jobless claims came in at 224,000 for the week ending December 13, down 13,000 from the prior week, suggesting layoffs remain modest as the labor market remains relatively tight.

The Conference Board reported a 0.3% drop in its Leading Economic Index (LEI) in September. Over the six months from March to September 2025, the LEI declined by 2.1%, a faster pace of deterioration than the prior six‑month period, pointing to weaker economic conditions on the horizon.

On the global front, the Bank of japan raised its short‑term rate to a 30‑year high, indicating rates are likely to stay in negative territory for the foreseeable future as policy supports domestic activity.

Meanwhile, government data showed cooler consumer inflation, helping bond and equity markets. The benchmark 10‑year yield dipped to about 4.12%, the lowest close in nearly two weeks, as investors reassessed the inflation path and policy outlook.

For readers seeking a fuller view, see the Bureau of Labor Statistics release and the Conference Board LEI overview for context on current trends. BLS Inflation Data • LEI Overview

Metric	Latest Reading	Context
Headline inflation (year over year)	2.7%	Below prior month; four‑year low in pace
Core inflation (year over year)	2.6%	Underlying price pressures easing
Unemployment claims (week ending Dec 13)	224,000	Down 13,000 from prior week
LEI (September)	-0.3%	Six‑month decline of 2.1%
10‑year Treasury yield	~4.12%	Lowest close in about two weeks
Bank of Japan policy rate	Raised to 30‑year high	Policy stance remains considerably accommodative

Why this matters-and what stays in focus

Economists say November’s softer inflation figures could bolster the argument for a slower pace of monetary tightening in the near term, though the data remain sensitive to distortions from data collection challenges tied to government shutdowns. The health of the labor market, ongoing wage dynamics, and global price trends will continue to shape the inflation path into year‑end and beyond.

Grocers, renters, and households with debt will watch closely for how quickly prices for essentials move in 2026, especially as energy and shelter costs can swing inflation readings. Analysts note that data revisions are possible as agencies recalculate from the shutdown period, which could alter the near‑term inflation picture.

evergreen insights: interpreting today’s numbers for the long run

Even as headline numbers ease,persistent core inflation signals that demand is moderating but not vanishing. A cooler inflation backdrop could support real wage gains if earnings growth keeps pace. Investors will weigh the inflation data against wage trends, consumer spending, and business investment, while policymakers balance the risk of overheated growth against the need to cool price pressures.

Key questions to monitor: Will December and January prints confirm the downward trend, or will revisions alter the trajectory? How will international developments influence domestic inflation and interest rates?

Disclaimer: This article is for informational purposes and does not constitute financial advice. Market conditions and data interpretations can change rapidly. Always consult with a licensed professional for investment decisions.

What are your thoughts on where inflation goes from here? Do you expect the next few readings to confirm a slower price rise, or could revised data spark renewed volatility?

How might households adjust spending and savings strategies if inflation remains near current levels or moves lower more slowly than expected?

Share your views in the comments and join the discussion. For ongoing updates, follow our coverage of U.S. inflation and the labor market.

Ment Uncertainty

November 2025 CPI Overview

• Headline CPI: 2.7 % year‑over‑year (YoY), down from 3.0 % in October.
• Core CPI (ex‑food & energy): 2.9 % YoY, a modest 0.1‑point dip.
• Monthly change: +0.2 % in November, versus +0.3 % in October.
• Seasonally adjusted: Data released by the Bureau of Labor Statistics (BLS) on December 12, 2025.

The slowdown marks the fastest annual decline in headline inflation since mid‑2022, reinforcing market expectations of a softer price environment.

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Core Inflation trends and Price‑Category Breakdown

Category	YoY Change (Nov 2025)	MoM Change
Shelter (rent, owners’ equivalent rent)	+3.2 %	+0.3 %
Medical care services	+2.5 %	+0.1 %
Used cars & trucks	+1.8 %	-0.2 %
Education services	+2.1 %	0.0 %
Energy (ex‑food)	-1.4 %	-0.4 %
Food away from home	+3.0 %	+0.2 %

Key takeaways

1. Housing costs remain the primary driver of core inflation, holding steady above 3 % YoY.
2. Energy prices turned negative, pulling the headline index lower.
3. Medical care and education show persistent, but manageable, price pressure.

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Data Gaps and Measurement Uncertainty

• Retail‑price survey lag: The BLS’s monthly retail‑price collection missed 2 % of respondents due to a cyber‑outage in early November, potentially understating price increases in the “food away from home” segment.
• Housing index revision: The owner‑equivalent‑rent (OER) component is based on the 2024 ACS sample, which may not fully capture rapid rental‑market shifts in secondary metros.
• Seasonal‑adjustment model update: A new ARIMA‑based method rolled out in October could cause short‑term smoothing artifacts, especially in volatile energy prices.

These gaps have prompted analysts at Bloomberg and the Federal Reserve Bank of New York to grade the november CPI data as “moderately reliable”, cautioning against over‑interpretation of the headline dip.

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Labor Market resilience Amid Cooling Prices

• Unemployment rate: 3.6 % (steady from October).
• Nonfarm payrolls: +210 K in November, above the 150 K consensus.
• Labor‑force participation: 62.8 % YoY, inching up by 0.1 ppt.
• Wage growth: Average hourly earnings +4.3 % YoY, signaling continued tightness.

Implications

• Wage‑price spiral risk remains limited: Even with solid job growth, wage gains have decelerated from 4.5 % YoY in Q2 2025.
• Hiring in tech and health sectors contributed the bulk of November’s job gains, offsetting slower hiring in manufacturing.

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Bond Yield Reaction: Treasury Yields Decline

Treasury security	yield (Nov 2025)	Change vs. Oct
2‑year note	4.11 %	-4 bps
10‑year note	3.78 %	-7 bps
30‑year bond	4.02 %	-6 bps
5‑year TIPS (real yield)	0.90 %	-2 bps

– Yield curve flattening: The 2‑year/10‑year spread narrowed to 32 bps,reflecting reduced expectations of near‑term Fed hikes.

• Inflation‑breakeven rates: 10‑year breakeven fell to 2.8 %, aligning closely with the headline CPI figure.
• Investor sentiment: Bloomberg’s “Yield Outlook Index” moved from +18 (bullish) to +7, indicating a modest tilt toward price stability.

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Implications for Federal Reserve Policy Outlook

1. Rate‑cut probability rises – The CME FedWatch Tool shows a 35 % chance of a 25‑bp cut at the December 2025 meeting, up from 18 % a month earlier.
2. Forward guidance likely to emphasize “data‑dependence” – The Fed’s November press conference highlighted “persistent labor‑market tightness” as a key variable.
3. Balance‑sheet normalization may pause – the Fed’s monthly Treasury purchases fell to the lowest level as early 2024, suggesting a temporary halt to quantitative tightening.

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Practical Takeaways for Investors and Policymakers

For Fixed‑Income Portfolios

1. Re‑weight duration: Shift modestly toward 5‑ to 7‑year Treasury‑linked ETFs to capture the steepening of the intermediate curve.
2. Consider inflation‑protected securities: TIPS remain attractive as breakeven rates track the CPI trend line.

For Equity Strategies

• Sector focus:

* Real estate – Gains from easing yields but watch for shelter CPI stickiness.

* Consumer discretionary – Benefit from lower energy costs, though higher food‑away‑from‑home prices could pressure margins.

For Policy Decision‑Makers

• Close monitoring of housing data: Shelter inflation is the primary obstacle to a sustained CPI decline.
• Targeted data collection: Address the BLS cyber‑outage risk and improve OER sampling to reduce future measurement gaps.

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Quick Reference: November 2025 Economic Snapshot

1. Headline CPI: 2.7 % YoY
2. Core CPI: 2.9 % YoY
3. Unemployment: 3.6 %
4. Payrolls: +210 K
5. 10‑yr Treasury Yield: 3.78 %
6. Fed rate‑cut probability: 35 %

These figures provide a concise framework for market participants assessing the trajectory of U.S. inflation, labor dynamics, and bond market behavior heading into 2026.