Inflation Slows to 2.7% in November, but Economists Warn Data May Be Distorted

Inflation unexpectedly slowed in November, offering what appeared to be welcome news for Americans still struggling with high living costs. The Consumer Price Index dropped to an annual rate of 2.7%, down from 3% in September, according to new data released by the Bureau of Labor Statistics.

However, economists are urging caution, saying the decline may be misleading due to major disruptions caused by the recent federal government shutdown. The shutdown, which lasted from October 1 through November 12, significantly affected data collection and delayed several key economic reports.

Experts say inflation did not suddenly improve as much as the headline number suggests. Heather Long, chief economist at Navy Federal Credit Union, noted that anyone shopping for groceries or paying utility bills likely hasn’t felt much relief. She and others argue the shutdown led to incomplete and distorted data, making it difficult to draw firm conclusions from the November report.

The October inflation report was not calculated at all, and November’s data collection started late. Because two-thirds of CPI prices are typically gathered in person, economists say many price changes may have been missed. As a result, monthly inflation changes could not be calculated for most categories.

Some economists pointed to unusual data, including near-zero changes in rent prices, as a red flag. Others described the report as flawed, suggesting it doesn’t align with what consumers are experiencing day to day.

While core inflation, which excludes food and energy, also slowed to 2.6%, economists warn the data could remain volatile for the next few months. Wells Fargo economists say inflation is slowing, but not by this much, and predict a rebound in prices when December data is released in January.

The White House praised the report, highlighting easing inflation and rising wages. Still, many economists advise Americans to take the latest numbers “with the entire salt shaker” as more complete data becomes available.

Credit: CNN Newsource

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