In a surprising turn, inflation in the United States showed signs of easing last month, according to a long-awaited government report delayed by a protracted federal shutdown.
Key Data from the Delayed Report
The US Labor Department finally released its Consumer Price Index (CPI) data on Thursday, 18 December 2025. The figures revealed that consumer prices rose by 2.7% in November compared to the same month a year earlier. This marked an unexpected deceleration from the 3% annual increase recorded in September.
The report's publication was pushed back by eight days due to a 43-day federal government shutdown. This disruption also meant the department could not compile complete figures for consumer prices and core inflation in October. Consequently, the November data provided investors, businesses, and policymakers with their first comprehensive look at inflation trends since the September numbers were published on 24 October.
Economic Context and Tariff Pressures
The latest figures come as US inflation has persistently remained above the Federal Reserve's 2% target. Economists attribute part of this stubbornness to President Donald Trump's trade policies, which included imposing double-digit tariffs on imports from numerous countries and targeted duties on specific goods like steel, aluminium, and automobiles.
While these tariffs have so far had a less dramatic inflationary impact than many economists initially feared, they continue to exert upward pressure on prices. This complicates the decision-making process for the Federal Reserve as it balances supporting the economy with controlling inflation.
Implications for Federal Reserve Policy
The central bank faces a delicate balancing act. It must decide whether to continue cutting its benchmark interest rate to bolster a sputtering job market or to pause further cuts until inflationary pressures show clearer signs of abating.
Just last week, the Fed opted to reduce the rate for the third time this year. However, officials signalled a more cautious path ahead, indicating they anticipate only one further rate cut in 2026. The new inflation data will be a critical piece of evidence as they calibrate their next moves in the coming months.
