U.S. inflation was rising before the shutdown. Tardy CPI to show if prices have gotten worse.

By Jeffry Bartash

First major inflation report since reopening of government could influence further Fed rate cuts

Americans are frustrated by inflation and the rising cost of living.

The U.S. jobs market isn't so hot, investors learned this week, but inflation is hotter than anyone would like. Just how much? We'll find out Thursday.

The consumer-price index for November will give Wall Street and the Federal Reserve a glimpse into the latest trends in inflation toward the end of the year.

Inflation had cooled considerably to a nearly four-year low of 2.3% in April, based on the CPI. Yet President Donald Trump jacked up tariffs in the spring to the highest level in decades, nudging prices higher.

Tariffs haven't produced the kind of price spikes critics predicted, but the rate of inflation moved back up to 3% as of September. That leaves prices rising notably faster than the Fed's 2% goal.

The big question is whether prices continue to go higher - or begin to recede as many top Fed officials and economists expect.

The November CPI, which was delayed a week by the government shutdown, will help answer the question. (The October report was canceled.)

Assuming inflation is close to a post-tariff peak, the Fed has cut interest rates three times since September to try to prop up a fragile labor market.

A combined October-November employment report published Tuesday after a long government shutdown-induced delay showed a paltry increase in new jobs.

The unemployment rate also rose to a four-year high of 4.6%, though the shutdown may have played a role. Some economists say the jobless rate is likely to come back down in December.

Whatever the case, hiring is unlikely to pick up anytime soon.

Further Fed rate cuts to help support the labor market, however, are going to depend on whether inflation is about to taper off.

Both the overall CPI and core CPI are forecast to rise 0.3% in November.

The increase in consumer prices in the 12 months ended in November could inch up to 3.1% from 3.0%, potentially the high-water mark due to tariffs.

The yearly increase in the core CPI is seen holding steady at 3%. The core rate omits volatile food and energy prices and is a better predictor of future inflation.

Some of the keys to watch are goods prices and the cost of housing, the biggest driver of inflation over the past few years.

Goods prices had been falling before the pandemic. Now they are rising at a 1.5% annual rate.

The cost of services rose 3.5% in the 12 months ending in September, but that marked the smallest increase since the pandemic. If service prices keep slowing, it could be a sign inflation is likely to start receding soon.

For that to happen, though, goods prices will also have to ease a bit in the near future.

That remains to be seen. Recent surveys of businesses suggest goods prices are still rising, and that consumers expect to pay more.

-Jeffry Bartash

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12-17-25 1246ET