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The numbers came in better than economists expected.
After skipping a month due to the federal government shutdown, the Consumer Price Index (CPI) was released for November, showing the inflation rate ticking lower.
The CPI inflation rate for November dropped to 2.7%, down from 3.0% in September, the last time the CPI came out. It was also lower than the 3.1% rate that economists had anticipated.
The rate rose 0.2% over the past two months, which was also better than the anticipated 0.3% increase.
Core CPI, excluding food and energy prices, increased 2.6% in November, down from 3.0% in September and lower than expectations of 3.0%.
Stocks opened higher with the S&P 500 rising 55 points, the Nasdaq increasing by 246 points, and the Dow Jones Industrial Average up 263 points.
“It always sounds smarter to predict trouble ahead, but this morning’s inflation data was much better than expected,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, said. “Of course, it’s only one month’s data points and they will likely fluctuate in the upcoming months, but the main concern of Fed officials who are reluctant to keep cutting is that inflation is persistently high and won’t come down if they keep lowering interest rates, and at this point that doesn’t look like it’s the case.”
Fuel Oil Prices Rise
Food prices rose 2.6% in November, year-over-year. Food away from home prices rose 3.7% with full-service meals rising 4.3% and limited service meals, or fast food, jumping 3.0%.
Food at home costs, or groceries. increased 1.9%. The meats, poultry, fish, and eggs index rose 4.7% with meat prices rising 8.9%, poultry increasing 1.3%, fish rising 5.2%, and egg prices down 13.2%.
The index for nonalcoholic beverages increased 4.3%, while cereals and bakery products rose 1.9%. In addition, the fruits and vegetables index rose 0.1%, while dairy and related products decreased 1.6%
Energy prices also jumped, rising 4.2% year-over-year. Fuel oil prices surged 11.3% in November, while electricity costs increased 7.4% and gas utilities increased 9.1%.
Shelter prices increased 3.0% year-over-year while medical care costs rose 2.9%, household furnishings and operations jumped 4.6%, recreation increased 1.8%, and used cars and trucks rose 3.6%. Further, new car prices ticked up 0.6%, while apparel costs rose 0.2%.
“Investors cheered the latest inflation report as yields fell on the news,” Jeffrey Roach, chief economist for LPL Financial, said. “We may have some more hot readings as demand ticks higher from larger than expected tax returns in early 2026 but we should expect inflation to cool in the latter part of next year. Overall, we may get some bumpy inflation readings in the next few months, but our year-end forecast for inflation is 2.5%, giving the Fed opportunity to cut rates a few times next year.”