November’s consumer price inflation report was remarkably soft given the backdrop of tariffs and concerns over insurance costs. Remember we don’t get month-on-month data due to no survey being conducted in October because of the government shutdown, but we have year-on-year prints and for headline that came in at 2.7% versus 3% in September and a 3.1% consensus prediction, while core (ex food and energy) inflation was just 2.6% versus September’s 3% outcome and a consensus projection of 3%. That 2.6% outcome was 0.2pp below even the lowest forecast submitted to Bloomberg in their consensus survey.
We had assumed we would get something closer to 3.1% for core inflation, which would have implied MoM increases of 0.3% for October and November, but today’s outcome suggests prices rose 0.2% over the two-month period in total! In terms of the main components helping to depress the annual inflation rates, food price inflation slowed 0.5pp to 2.6%, led by a 0.8pp slowing in grocery to 1.9% YoY. Used vehicles slowed to 3.6% from 5.1%, which is a surprise based on auction prices. Both of the main housing components slowed by 0.4pp while medical care services slowed by 0.6pp to 3.3%. There was less of a drop in core goods (to 1.4% YoY from 1.5% YoY), but that is still a good outcome given tariffs. Energy prices did rise, but this is temporary given gasoline is now below $3/gallon nationally.