Inflation Data Faces Credibility Questions: 'This Is Totally Inexcusable'

Core Viewpoint - Market frustration with the November Consumer Price Index (CPI) is centered on the trustworthiness of the reported inflation figure, which showed a decrease to 2.7% from 3% in September, rather than the actual low inflation rate itself [1][2]. Group 1: CPI and Inflation Analysis - The annual CPI inflation slowed to 2.7% in November, reinforcing President Trump's narrative that inflation is "essentially gone" [1]. - Economists argue that the CPI figure was distorted due to the federal government shutdown, which halted data collection in October, leading to potentially misleading signals about underlying inflation trends [1][3]. - Shelter inflation, which includes rents and owners' equivalent rent (OER), accounts for about one-third of the CPI basket and significantly influenced the apparent cooling of inflation [2]. Group 2: Methodological Concerns - The Bureau of Labor Statistics (BLS) carried forward September price levels for October due to the lack of survey-based prices, effectively assuming zero inflation for that month, which compressed shelter price increases in November [3][4]. - Goldman Sachs chief economist Jan Hatzius noted that this methodology likely understated true shelter inflation, as the November increase reflects an average of price changes since May [4][5]. - Hatzius indicated that the same methodological choices that depressed November inflation could lead to artificial rebounds in future CPI readings, particularly in April [5]. Group 3: Expert Opinions - Omair Sharif, founder of Inflation Insights, criticized the BLS approach as "totally inexcusable," arguing that the shelter numbers only make sense if October inflation is considered zero [6].