Inflation cooled in November after peaking in September

On an annual basis, the food and energy index, excluding all items, rose 2.6%, with energy posting an annual gain of 4.2% and the food index up 2.6% on an annual basis.

Compared to September, the index for all items minus food and energy increased by 0.2% on a seasonally adjusted basis, with energy increasing by 1.1% and food by 0.1%.

“CPI inflation came in lower, especially rent data,” said lead analyst Logan Mohtashami. “Some people are suspicious of that, but many of us suspect that the CPI has been driving rents for years. Ten-year yields fell immediately after the report and stayed lower all morning.”

The shelter index also recorded increases, up 3.0% year-on-year and 0.2% from September. On an annual basis, the index for the rent of primary residences increased by 3.0% and the equivalent rental price of primary residences for owners increased by 3.4%.

“The fall in inflation in November is good news for consumers,” said Lisa Sturtevant, chief economist at Clear MLSsaid a statement. “Higher energy prices fueled inflation in November, but prices of other goods, including groceries and new vehicles, have fallen. Despite last month’s promising move on inflation, today’s report represents one data point, and we will need a few more months of CPI data to understand whether inflation is moving in the right direction.”

Although November’s headline figures paint a better picture than the last CPI release, economists are not ready to celebrate yet.

“The lack of data for October means that the November figures may underestimate the real rate of inflation, making the underlying trend harder to discern,” said Sam Williamson, a senior economist at First Americansaid a statement. “That uncertainty leaves the Federal Reserve inclined to treat the report cautiously and wait for cleaner data before determining the next policy step.”

Sturtevant agrees, noting that the Fed will closely monitor the release of December inflation data before its next meeting.

“Inflation will be a key factor to watch in the housing market in 2026. If inflation picks up again, it could create headwinds for market activity,” she said. “Higher inflation generally means higher mortgage rates. Inflation remains above the Federal Reserve’s 2% target, and concerns about inflation are a key reason the central bank has announced a pause in rate cuts, which could keep mortgage rates from moving lower or even lead to a rate hike.”