CPI Report: Consumer Prices Rose 2.7% Annually In November, Lower-Than-Estimated Figures Support Rate Cut Optimism

• The consumer price index (CPI) rose 2.7% on an annual basis before the seasonal adjustment in November.
• November’s CPI data is the first since the U.S. government shutdown ended. 
• The energy index increased by 1.1%, driven by a 11.3% rise in the fuel oil index.

U.S. consumer prices rose less than expected in November, signaling easing inflationary pressures and raising hopes of potential rate cuts in the coming months. 

According to the Bureau of Labor Statistics (BLS), the consumer price index (CPI) rose 2.7% on an annual basis before the seasonal adjustment in November. On a seasonally adjusted basis, CPI rose 0.2% over the 2 months ending in November.

Core CPI

Core CPI, which excludes food and energy, rose 2.6% on an annualized basis in November. The November CPI data came out almost a week later than planned, and the October report was scrapped entirely because of the government shutdown. 

November’s CPI data is the first since the U.S. government shutdown ended. Since the October CPI report was skipped, Thursday’s release lacked the full set of usual data. The BLS explained it couldn’t gather the October figures but relied on some “nonsurvey data sources” to calculate the index.

The index for shelter rose 0.2% in November. The food index also rose 0.1%, while the energy index increased by 1.1%, driven by a 11.3% rise in the fuel oil index.

Employment Market 

According to a CNBC report, Tom Lee, head of research at Fundstrat, said, “A tame CPI will reinforce the Fed is focused on protecting the employment market. And that means a Fed ‘put’ is now in place for the economy.” 

“In other words, if the Fed is concerned about downside risks to the economy, the Fed ‘put’ comes into play and this would be for stocks to rise,” he added.

On December 10, the Fed cut the key borrowing rate by 25 basis points, bringing down the federal funds rate to the 3.5% to 3.75% range, marking the third reduction in 2025, following similar quarter-point cuts in September and October.

Stocktwits users hoped for further rate cuts. 

Following the release of CPI data, U.S. equities gained on Thursday morning. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 1.05%, while the Invesco QQQ Trust (QQQ) rose 1.69%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘Neutral’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.2% at the time of writing.

Also See: OpenAI’s ChatGPT Outpaces Microsoft Copilot In US Campus Adoption: Report

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