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Author: Yang Dapan, Jin Shi Data
The much-anticipated CPI data showed that core U.S. inflation fell to a four-year low in November, but economists agreed on the veracity: There was something wrong with the report.
In a CPI report that was severely distorted by the record-long government shutdown,Several categories of inflation that have long been stubbornly high seem to have all but disappeared out of thin air.Chief among them is housing costs, which account for about a third of the consumer price index, but prices in other categories such as air tickets and clothing also fell significantly.
Due to the government shutdown, the Bureau of Labor Statistics was unable to collect price information throughout October and began sampling later than usual in November.So-called core CPI rose 2.6% year-on-year in November, the slowest pace of growth since 2021.
Several forecasters pointed out thatThe lack of data for October left large gaps in the widely watched report, effectively assuming there was no inflation that month..This ultimately led to significant downward pressure on November’s inflation data, they said.Some people pointed out thatA shortened data collection period may also bias the data.
Bureau of Labor Statistics spokesperson Stacey Standish said the agency uses a process called “carry-forward imputation” for key housing price indicators.She said,This method “uses data from the previous collection period to estimate prices, effectively assuming that prices have not changed.Rent for October 2025 was carried forward from April 2025, resulting in no change in October rent and Owner Equivalent Rent (OER) index values.”
The title of the economists’ analysis report is meaningful: TD Securities called it “Lost in Translation.”William Blair called it “late and fragmented”, while Ernst & Young-Parthenon described it as a CPI report “like Swiss cheese (riddled with holes)”.
“This unique report produces one anomaly after another, all pointing almost in the same direction,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, said in a note.”I think it would be unwise to ignore it completely, but I also think it would be too hasty to just take it all in.”
The U.S. government shutdown limited the Bureau of Labor Statistics’ ability to calculate month-on-month growth, so it primarily looked at changes from September to November.In FAQs and other supporting documents released a day before the report was released, the agency warned that some of the data may not be fully trustworthy.
“If bimonthly CPI data are more volatile, you should have less confidence in the estimates for the missing months,” the Bureau of Labor Statistics said in a Wednesday document explaining how it imputes missing data points.
The Biggest Issue: Housing Subdivision
Compared with recent trends,The biggest inconsistencies occur in key housing categories, which was originally the main driver of inflation in recent years.Some economists point out that prime rents have only increased an astounding 0.06% on average over two months, and owner-equivalent rents have increased an average of 0.14%, which would only be possible if the Bureau of Labor Statistics kept the October index value essentially the same as last month, meaning no growth from September.
“This is not a good idea anywhere in the world, but that’s where we are now,” said Omair Sharif, president of Inflation Insights LLC.
Sharif added,Month-on-month changes in key housing categories will largely be resolved by the time CPI is released in December, and while they may look “high,” annual changes may be affected for longer.
This is because the Bureau of Labor StatisticsSampling rents for several groups of households on a rolling six-month basis, so some erroneous October values may not exist untilIt will not be removed from the index until April next year..
Despite these oddities, several economists insist that inflation is cooling, just perhaps not as much as Thursday’s report suggested.”Looking through the noise, we think inflation is moderating on trend, even if today’s reading overstates the magnitude of the slowdown,” economists at Wells Fargo said in a note.
However, the title of their analysis report is more direct: “You have to add a whole can of salt to swallow it(This means that the data is extremely watery and requires extreme caution).”
