{"id":190332,"date":"2025-12-18T17:38:07","date_gmt":"2025-12-18T17:38:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/190332\/"},"modified":"2025-12-18T17:38:07","modified_gmt":"2025-12-18T17:38:07","slug":"inflation-eased-in-november-coming-in-below-forecasts","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/190332\/","title":{"rendered":"Inflation eased in November, coming in below forecasts"},"content":{"rendered":"

\"play\"<\/p>\n

Trump speaks about affordability at McDonald’s forum<\/p>\n

President Trump joked that he was the “first former McDonald’s fry cook” to become president.<\/p>\n

Inflation eased its grip on the American consumer in November, with prices rising 2.7% from a year earlier, the Labor Department\u00a0said in a Dec. 18 report.\u00a0<\/p>\n

The annual inflation rate had crept as high as 3% in September. The slightly lower rate for November reflected smaller price increases for gasoline and new vehicles, among other items.<\/p>\n

Core inflation, which excludes volatile food and energy items and is watched closely by the Federal Reserve, came in at 2.6% in November \u2013 the lowest rate since 2021.<\/p>\n

Many forecasters had projected the upward march of inflation would continue, under pressure from President Donald Trump<\/a>‘s campaign of import tariffs. One consensus forecast put the overall inflation rate for November at 3.1%, nearly half a point higher than the reported figure.<\/p>\n

“The market can hardly believe their eyes,” said Chris Rupkey, chief economist at FWDBONDS. “Where is the tariff inflation?”<\/p>\n

Stocks rose at the opening bell on Dec. 18 in response to the unexpectedly rosy inflation report.<\/p>\n

Just as interesting, perhaps, was\u00a0what the Bureau of Labor Statistics did not say: What happened to consumer prices in\u00a0October.\u00a0<\/p>\n

There will be no inflation report for October, owing to the nation\u2019s longest-ever\u00a0government shutdown<\/a>, leaving a\u00a0permanent\u00a0one-month gap in the historical record.\u00a0<\/p>\n

Some analysts questioned the accuracy of the November inflation data. The shutdown began on Oct. 1 and ended on Nov. 12. That gap, coupled with the late-November Thanksgiving holiday, left the government limited time to collect data on prices.<\/p>\n

“It\u2019s just one month of data, and distortions can\u2019t be ruled out,” said Seema Shah, chief global strategist at Principal Asset Management.<\/p>\n

That data lapse also means the Labor Department could not report any month-to-month changes in consumer prices for November. In a normal month, economists count on monthly price fluctuations to provide signals on the direction of the economy.<\/p>\n

Here\u2019s\u00a0what we do know: Inflation had crept steadily up in the months since President Donald Trump launched a slate of aggressive import tariffs, which raised consumer prices through\u00a0the summer and fall.\u00a0\u00a0<\/p>\n

The annual inflation rate\u00a0stood at 2.3% in April<\/a>, its lowest ebb since early 2021. The index rose to 3% in September, its highest mark since January.\u00a0<\/p>\n

Tariffs have fed inflation in 2025<\/p>\n

The difference, economists say, is tariffs. Import taxes have added\u00a0roughly 0.7\u00a0percentage points to the inflation rate in 2025 through September, according to a\u00a0November paper<\/a>\u00a0published by the National Bureau of Economic Research.\u00a0\u00a0<\/p>\n

Retailers have passed along some tariff costs to their customers, pushing up prices in some categories even as price increases in other areas, such as rent and gas, have cooled.\u00a0\u00a0<\/p>\n

More: Consumers feared a Trump tariff inflation crisis. Will it ever come?<\/a><\/p>\n

How will inflation affect interest rates?<\/p>\n

A downward inflation trend would ease the job of the Federal Reserve, whose leaders must decide whether to continue lowering interest rates at their next meeting, in January 2026.\u00a0<\/p>\n

The Fed typically raises interest rates to\u00a0tamp down\u00a0inflation, and\u00a0lowers them to stimulate the job market. In recent months, both metrics seemed headed in the wrong direction.\u00a0<\/p>\n

The November inflation report “is welcome news for both consumers and the Federal Reserve, which have been grappling with renewed inflation pressures since inflation picked back up this summer,” said\u00a0Stephen Kates<\/a>, a financial analyst at Bankrate.<\/p>\n

The latest\u00a0jobs report<\/a>\u00a0showed that unemployment rose to 4.6% in November, the highest rate since September 2021.\u00a0\u00a0<\/p>\n

The Fed\u2019s inflation target is an annual rate of 2%, sufficiently low that consumers\u00a0don\u2019t\u00a0really notice it. The Consumer Price Index was approaching that 2% goal when Trump unveiled his tariffs, whereupon the index surged higher.\u00a0<\/p>\n

\u201cBringing inflation back to the Federal Reserve\u2019s 2% target remains a long process, one that the\u00a0Fed now\u00a0projects may not be achieved until as late as 2028,\u201d Kates said.\u00a0<\/p>\n

A 3% inflation rate\u00a0is problematic, economists say, but it falls far short of an inflation crisis.\u00a0It\u2019s\u00a0more\u00a0of\u00a0a \u201cfrustration\u201d\u00a0to American consumers,\u00a0said\u00a0Bill Adams<\/a>, chief economist of Comerica Bank. \u201cYou see deep unhappiness over it.\u201d\u00a0<\/p>\n

Many recent projections have suggested the inflation rate will remain in the 3% range through the early months of 2026.\u00a0Jerome Powell, the Fed chair, said in a Dec. 10 press conference that he expects tariffs to add another “couple tenths” to the inflation rate next year.<\/p>\n

Other observers are more optimistic.<\/p>\n

“The tariff bump is over, and the trend of lower prices is\u00a0back on track,” said Jamie Cox<\/a>, managing partner for Harris Financial Group. “Consumers will see the benefits of lower prices right around the corner in 2026.”<\/p>\n

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