Published: 2025-12-18T14:10:17.000Z

U.S. November CPI - Is the tariff impact fading?

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November’s CPI is significantly lower than expected, at 2.7% yr/yr, 2.6% ex food and energy, compared with 3.0% for both series in September (October data will not be released). November’s core CPI index is up only 0.16% from September’s, implying an average rise of less than 0.1% per month over the last two. 

Overall CPI is up by 0.20% over the two months, implying an average gain of 0.1%, though weekly data on gasoline prices suggested a dip in October and a rise in November, so perhaps CPI would have been unchanged in October and up by 0.2% in November.

The surprisingly soft data may reflect an easing of tariff feed-through, or pricing decisions being delayed until the Supreme Court delivers a verdict on the tariffs, or even pricing decisions simply being delayed until the New Year. The data is certainly significantly softer than expected. It may reflect a weakening consumer picture in Q4 restraining prices, though another possibility is that difficulties in measuring prices given the turmoil in government has the data under-estimated.  Still, the data will be encouraging to the Fed doves.

Prices for food, transport and medical care rose only 0.1% over the two months, while apparel fell by 0.7% and recreation fell by 0.6%. Two month gains of 0.6% in education and communication and other goods and services are more in line with what would be expected. Even a 0.4% rise in housing is quite subdued for two months, with owners’ equivalent rent up by 0.3% over the two months.

Weekly initial claims cover December’s payroll survey week and at 224k represent a return to trend after last week’s correction higher to 237k from a very low 192k seen in the Thanksgiving week. The 4-week average of 217.5k is down from 224.75k in November’s payroll survey week.

Continued claims cover the week before initial claims and with a 67k rise to 1.897m have not fully reversed a 107k fall in the Thanksgiving week. Trend, which was rising through October, is now falling. The signals for December’s payroll are somewhat positive.

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