After long-awaited government data showed that the US underlying inflation rate in November dropped to its lowest point in four years, economists at least agreed on one thing: Something is wrong.
A report shows that several long-standing high-inflation categories seem to have almost vanished due to the record-breaking government shutdown. The most significant one is housing costs, which account for about one-third of the consumer price index, but prices in other categories such as air tickets and clothing have also dropped significantly.
Due to the pandemic lockdown, the Bureau of Labor Statistics of the United States was unable to collect price data in October and only began sampling in November. The core CPI, which excludes food and energy prices, rose by 2.6% year-on-year in November, the lowest growth rate since 2021 and lower than all expectations from a Bloomberg survey of economists.
Several forecasters pointed out that the absence of October data – which left large blank spaces in this closely watched report – was effectively equivalent to assuming that prices did not rise that month. They said this ultimately exerted considerable downward pressure on the inflation data for November. Some also noted that the shortened data collection period could have led to data distortions.
Stacy Standish, a spokesperson for the Bureau of Labor Statistics (BLS), said that the agency uses a method called the carry-forward approach for key housing price indicators. She explained that this method “estimates prices using data from the previous collection period, effectively treating the prices as if they had not changed.” “The rent data for October 2025 was carried forward from April 2025, so the rent index and the owner’s equivalent rent index remained unchanged in October.”
Stephen Stanley, chief U.S. economist at Santander Capital Markets, said in a report: “This unique report reveals one anomaly after another, almost all pointing in the same direction. I think it would be unwise to completely dismiss these results, but it would also be too hasty to blindly believe them.”
Due to the government shutdown, the Bureau of Labor Statistics (BLS) was unable to calculate the standard monthly price index, so it mainly observed the changes from September to November. In the frequently asked questions and other supporting documents released the day before the report, the agency warned in advance that some of the data might not be completely reliable.
The Bureau of Labor Statistics said in a Wednesday document explaining how it estimates missing data points: “If the bimonthly consumer price index data fluctuates significantly, then confidence in the estimated value for the missing month should be reduced.”
The biggest inconsistency compared with recent trends lies in key housing categories, which have been the main drivers of inflation in recent years. Some economists point out that the average increase in major housing rents was only 0.06% over two months, and the average increase in owner equivalent rents was only 0.14%. This could only have occurred if the Bureau of Labor Statistics (BLS) essentially kept the index for October at the same level as the previous month. This means there was no growth compared with September.
Sheriff said that the month-on-month changes in key housing categories would become clear after the release of the December consumer price index (CPI), although these changes might appear “high”. However, the impact of the annual changes could last longer.
This is because the Bureau of Labor Statistics (BLS) conducts a sampling survey of rents in multiple households every six months, so some incorrect values in October may not be removed from the index until April.
Despite some special circumstances, some economists still insist that inflation is cooling down, though perhaps not as much as the report on Thursday indicated.
In a report, economists at Wells Fargo said, “Despite all the noise, we believe inflation is trending lower, even if today’s reading overstates the extent of the slowdown.”
