US CPI at 2.7% in November, Distorted by Shutdown

U.S. consumer prices rose 2.7 percent in November from a year earlier, marking the lowest annual increase in years and falling short of economists' expectations for 3.0 to 3.1 percent. The data, released Thursday by the Labor Department, also showed core inflation, which excludes food and energy, easing to 2.6 percent. However, the figures drew immediate skepticism from economists due to distortions caused by the 43-day federal government shutdown, which delayed the report and disrupted price data collection in October and early November.

The shutdown prevented the Bureau of Labor Statistics from gathering complete information, forcing the agency to rely on statistical assumptions, such as carrying forward prior prices. This particularly affected the shelter category, which accounts for over 40 percent of core inflation and showed unusually flat readings. Economists noted anomalies in other areas, including gasoline prices that appeared to rise despite declines and a sudden drop in daycare costs. "This was one flawed CPI report," said Joseph Brusuelas, chief economist at RSM. Diane Swonk, chief economist at KPMG, described the numbers as "wacky," warning that the distortions...