The year-over-year inflation rate slowed to 2.7% in November, down from 3% in September, the last month for which data is available.
Economists expected a 3.1% rate, which would have been the highest since May 2024.
The Bureau of Labor Statistics won't be able to calculate an overall consumer price index for October 2025 because the government shutdown that lasted from October to roughly mid-November affected data collection.
Federal Reserve Chair Jerome Powell said in a press conference earlier this month that inflation and the labor market data would be "distorted" and should be viewed with a "skeptical eye."
The Core CPI, which excludes volatile food and energy prices, rose 2.6% from a year ago in November, below the 3% forecast and the 3% year-over-year rise in September.
The food index also increased by 2.6% over the year in November, which is lower than the 3.1% rise in September. Food away from home, such as at restaurants, rose more quickly than food at home, such as groceries, increasing by 3.7% and 1.9%, respectively.
The shelter index, which had generally been rising at a slower rate, rose 3% year over year in November, far below September's 3.6% increase.
Earlier this week, the BLS also published October and November job growth data, as well as last month's unemployment rate, providing more clarity to the state of the economy after a murky data picture due to delayed or canceled government data releases. This delayed report revealed a mixed labor market, characterized by better-than-expected job growth, unemployment rate above that in September, and slowing wage growth.
Both reports will be helpful for the Federal Reserve's next interest rate decision. Before the CPI release, CME FedWatch showed a roughly 75% chance that the Fed would hold rates steady, after three straight cuts, and about a 25% chance of a 25-basis-point cut. The probabilities didn't change that much after the release, shifting to about 71% and about 29%, respectively.
"Today's low inflation reading won't move the needle for the Fed given how noisy the data is," Kay Haigh, global cohead of Fixed Income and Liquidity Solutions in Goldman Sachs Asset Management, said.
The Federal Open Market Committee members, who make the federal funds rate decision, won't meet again until January 27 and January 28, so they will have even more labor market and inflation information before then to make their call.
"All told this is a positive report, that comes with an asterisk. Subsequent CPI's will likely smooth out the statistical errors that might have been present in today's report," Art Hogan, chief market strategist for B. Riley Wealth, said.
