New federal data shows consumer prices rose 2.7% over the past year, a figure that contradicts recent claims of a rapid decline. The release follows a prolonged government shutdown that disrupted data collection, leaving no report for October and only a partial picture for November.
The latest Consumer Price Index reading, while down from 3% in September, fell short of economist forecasts. This persistence of above-target inflation coincides with a rising unemployment rate, which reached 4.6% last month—its highest point in four years. The labor market presented a mixed message, however, with the economy adding 64,000 jobs in November following a loss of 105,000 in October.
The economic landscape is marked by ongoing affordability concerns for many households. Price growth, which spiked to generational highs several years ago, has retreated but remains elevated. After dipping to 2.3% last April, the inflation rate has since climbed.
Recent policy decisions are widely cited by economists as a contributing factor to price pressures. Analysis indicates that current trade policies have resulted in the highest effective tariff rates in decades. One estimate suggests these measures could cost the average household an additional $1,700 annually, even with certain exemptions in place.
This economic climate presents a significant challenge for the Federal Reserve, which aims to balance its dual mandate of stable prices and maximum employment. The central bank has reduced interest rates three times this year but has resisted calls for more aggressive cuts. Officials have signaled a potential pause in further easing as they assess whether inflation and labor market pressures are reaching an equilibrium.
The Fed Chair recently emphasized the complexity of the current situation, stating a commitment to returning inflation to its 2% target while acknowledging labor market weakness. He also cautioned that economic data from the shutdown-affected period would require careful scrutiny.
Public sentiment appears to be shifting, with recent polling indicating a growing number of consumers blame current leadership for high prices. Surveys also show a notable increase in household inflation expectations over the course of the year.