Markets Await Critical November Inflation Data After Government Shutdown

2025-12-18 economy

Washington, Thursday, 18 December 2025.
Markets are bracing for today’s release of the November Consumer Price Index (CPI), the first significant economic gauge since the 43-day government shutdown ended. While the consensus forecast anticipates a 3.1% annual inflation rate, the critical takeaway is the unprecedented lack of context: the cancellation of October’s data has created a historic gap, meaning this will not be a “clean” reading. As the Federal Reserve looks toward 2026, this fragmented dataset must serve as the primary compass for future interest rate decisions despite potential distortions from the political gridlock.

Analyzing the Inflation Forecast

Economists surveyed by Dow Jones anticipate that the November report will reveal a 12-month inflation rate of 3.1%, a slight uptick from the 3.0% recorded in September [1]. Core CPI, which strips out volatile food and energy prices, is expected to hold steady at 3.0% [1]. While some analysts, such as those at RSM, project a slightly softer annual rise of 3% [2], the consensus leans toward an acceleration. If the rate hits 3.1%, it would mark the fastest pace of inflation since May 2024 [3]. This potential increase is psychologically significant; as noted by José Torres of Interactive Brokers, the distinction between a “two handle” and a “three handle” on inflation readings is paramount for market sentiment [1].

Navigating the Data Void

The interpretation of today’s figures is complicated by a significant statistical blind spot. The Bureau of Labor Statistics (BLS) was forced to cancel the October inflation report entirely due to the 43-day government shutdown that concluded on November 12, 2025 [1]. This disruption has resulted in what Victoria Fernandez of Crossmark Global Investments calls a “not… clean” CPI number, as the typical month-over-month continuity has been severed [1]. The data collection issues extend beyond inflation; the shutdown also prevented the household survey collection for October, causing the first-ever gap in the unemployment rate series since 1948 [5].

Policy Implications and Economic Strain

The Federal Reserve’s path forward remains fraught with complexity as it attempts to steer the economy toward stability. Current projections from the central bank suggest only one interest rate cut is on the table for 2026 [1]. However, the economic landscape is shifting beneath the surface. The unemployment rate has climbed to 4.6% as of November, a notable increase of 0.6 percentage points from the 4.0% level seen in January 2025 [7]. Furthermore, the economy has shed jobs in three of the last six months, with federal employment specifically declining by 162,000 in October alone [7]. These softening labor market conditions, combined with persistent inflation, challenge the Fed’s ability to maintain a “wait-and-see” mode [1].

The Long Road to Price Stability

Looking beyond the immediate volatility, the cumulative impact of inflation continues to weigh heavily on consumers. Since January 2021, households have absorbed a staggering 23.5% increase in the overall price level [2]. While forecasters at Wells Fargo Securities expect inflation to hover near 3.0% through the first half of 2026 before cooling [3], long-term expectations remain elevated. A recent survey by the Philadelphia Fed indicates that firms now anticipate the 10-year average annual price increase to be 4.0% [4]. As the pieces of this fragmented economic puzzle come together today, the market will be looking for any sign that the elusive return to the Fed’s 2% target is still feasible.

Sources

Inflation CPI