U.S. consumer prices likely rose at their fastest annual pace in about a year and a half in November, underscoring mounting affordability pressures for American households that economists partly attribute to higher import tariffs.
A Reuters survey of economists predicts the Consumer Price Index increased 3.1% year-on-year in November, which would mark the largest rise since May 2024. That compares with a 3.0% increase recorded in the 12 months through September. Economists say the data would confirm that progress in cooling inflation has stalled.
Data Disruptions After Government Shutdown
The Labor Department’s Bureau of Labor Statistics is set to release the delayed November CPI report on Tuesday, following a 43-day government shutdown that prevented the collection of October data. As a result, the BLS will not publish month-to-month CPI changes, and the October CPI release was canceled entirely because price data could not be collected retroactively.
The shutdown also disrupted labor market reporting, marking the first time the U.S. government failed to publish an unemployment rate for October. The BLS said it would publish year-on-year CPI and core CPI figures for November, along with a limited number of additional indexes that do not rely on in-person data collection.
Economists Warn Inflation Progress Has Stalled
Economists say the available data still point to renewed inflationary pressure, particularly in goods prices. Andy Schneider, a senior U.S. economist at BNP Paribas, said companies in goods-producing sectors were increasingly passing tariff-related costs on to consumers.
However, some analysts cautioned that November inflation could come in below expectations because data collection extended later into the month, when retailers typically offer holiday discounts. That could lead to softer prices for items such as furniture and recreational goods.
Citigroup economist Veronica Clark said any unusual weakness in November goods prices could be temporary, with a rebound likely in December as retailers reset prices.
Tariffs Add to Cost Pressures
President Donald Trump’s sweeping import duties have pushed up prices for many consumer goods, though the impact has been gradual. Businesses initially relied on pre-tariff inventories and absorbed part of the cost increases, which helped limit price rises earlier in the year, including for new vehicles.
Economists say this buffer is now fading. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said retailers had passed on roughly 40% of tariff costs to consumers by September, with that figure expected to rise to about 70% by March before stabilizing.
The burden is falling disproportionately on lower-income households, who tend to have little savings and have experienced slower wage growth than higher-income workers, economists said.
Core Inflation and the Fed Outlook
Core CPI, which strips out food and energy prices, is expected to rise 3.0% year-on-year in November, matching September’s pace. Persistent increases in rents and goods prices are likely to offset declines in airfare, hotel and motel room rates.
The Federal Reserve focuses on the Personal Consumption Expenditures price indexes for its 2% inflation target. However, the October Producer Price Index report was canceled, and November’s PPI data will not be released until mid-January. The government has yet to announce a new release date for November’s PCE inflation data.
Both PCE inflation measures remained well above the Fed’s target in September.
Policy Uncertainty and Price Outlook
The Federal Reserve cut interest rates by 25 basis points last week, bringing its benchmark rate to a range of 3.50% to 3.75%, but signaled further cuts are unlikely in the near term. Policymakers said they were awaiting clearer signals from inflation and labor market data.
Fed Chair Jerome Powell told reporters that tariffs were responsible for much of the recent inflation overshoot. While the White House has begun rolling back duties on some goods, including beef, bananas and coffee, economists say it could take time for consumers to see lower prices.
Sara House, a senior economist at Wells Fargo, warned that firms often reassess pricing at the start of the year, raising the risk of another burst of goods inflation in the first quarter.
Analysis
The November inflation report is likely to reinforce concerns that U.S. disinflation has stalled just as policy uncertainty rises. Tariffs are emerging as a renewed inflation driver, particularly for goods, and their impact is increasingly being felt by lower-income households. With incomplete data following the government shutdown and inflation still above target, the Federal Reserve is likely to remain cautious, keeping interest rates higher for longer as it waits for clearer evidence that price pressures are easing.
With information from Reuters.
