The Consumer Price Index for November showed inflation running at 2.7% annually, lower than September's 3% reading and below the 3.1% economists had expected. Core CPI, which strips out volatile food and energy costs, came in at 2.6%—the lowest reading since March 2021, when inflation first began its post-pandemic surge.

On the surface, this is exactly what the Federal Reserve wants to see: inflation continuing to cool toward its 2% target. Markets rallied on the news, with the tech-heavy Nasdaq jumping as AI trade enthusiasm reignited.

There's just one problem: nobody fully trusts the data.

The Shutdown Distortion

The Bureau of Labor Statistics didn't collect survey data for October 2025 due to the 43-day government shutdown. BLS was unable to retroactively collect the missing information. CPI data collection only resumed on November 14, 2025.

This matters because the CPI measures price changes over time. When you're missing a data point in the middle of your series, the November reading becomes less reliable as a signal of the underlying trend.

Economists were quick to wave caution flags. Heather Long, chief economist at Navy Federal Credit Union, wrote: "It's hard to read too much into the November inflation data. The shutdown clearly had a big impact on data collection."

New York Fed President John Williams told CNBC that data distortions likely pushed the CPI reading down by "probably a tenth or so."

What the Numbers Show

Despite the noise, some patterns are visible:

  • Shelter: Rose 3%, indicating progress toward the Fed's 2% goal. Housing costs have been the stickiest inflation component.
  • Energy: Up 4.2% over the past year
  • Food: Up 2.6% annually, but with wild variations—beef roasts are up 21%, coffee up 19%, bananas up 7%

Fed Implications

The Federal Reserve cut rates by 25 basis points earlier this month for the third consecutive reduction, bringing the range to 3.5%-3.75%. The November CPI reading theoretically supports continued easing—but Fed officials are clearly skeptical of the data quality.

"Today's low inflation reading won't move the needle for the Fed given how noisy the data is," said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management.

Markets are currently pricing in two 25-basis-point cuts in 2026, while the Fed's median projection suggests just one. The gap reflects uncertainty about where inflation is really heading once clean data resumes.

What Happens Next

The December CPI reading, due in mid-January, should be more reliable. That report will cover a full month of post-shutdown data collection and provide a cleaner read on the inflation trajectory.

Until then, investors are left with a frustrating reality: the most important economic indicator in the country may be telling us less than it normally does. The shutdown's disruption to data collection created a fog that won't fully lift until 2026.

The Bottom Line

November's 2.7% CPI reading looks good on paper, but the underlying data quality is compromised. The direction of travel—inflation cooling toward the Fed's 2% target—appears intact, but the precise level is uncertain. For investors, the takeaway is humility: economic signals aren't as clear as headline numbers suggest, and positioning based on a single distorted data point carries risk.