US core CPI unexpectedly eases to slowest pace since 2021

Shoppers inside the Serramonte Mall in Daly City, California. (Bloomberg)

Underlying US inflation rose in November from a year earlier at the slowest pace since early 2021, marking a respite from months of stubborn price pressures, according to a report complicated by the federal government shutdown.

The core consumer price index, which excludes the often-volatile food and energy categories, increased 2.6% in November, according to Bureau of Labor Statistics data out Thursday. That compares with a 3% annual advance two months earlier. The overall CPI climbed 2.7% in November from a year ago.

The BLS was unable to collect much of the October price data due to the government shutdown, limiting the agency’s ability to determine month-over-month changes for the broader measures of inflation and many key categories in November.

The BLS said the core CPI rose 0.2% over the two months ended in November, restrained by declines in costs of hotel stays, recreation and apparel. Prices of household furnishings and personal care products rose.

Despite numerous caveats, the report offers hope that inflationary pressures are easing after remaining stuck in a narrow range since early this year.

Stock-index futures extended gains, while Treasury yields and the dollar fell after the report.

It’s not clear whether the CPI report will sway Federal Reserve policymakers, who remain divided on the course of interest rates next year. Last week, the Fed lowered interest rates for a third straight meeting to guard against a more concerning deterioration in the labor market.

Fed Chair Jerome Powell said last week the CPI data “may be distorted” because of the record-long government shutdown that ended on Nov. 12.