The freshly released U.S. November CPI report looks on the surface like a long-awaited “gift” to the market, but there’s more beneath the headline. The data show headline CPI rising 2.7% year-on-year in November well below the 3.1% consensus while core CPI rose 2.6% year-on-year by the slowest pace since 2021. In theory, this should be a powerful signal that inflation is cooling and could meaningfully tilt the Fed’s policy balance. However, because of missing data and forced changes to the statistical methodology, the “true value” of this report is being rigorously questioned by market participants.

CPI Data in Detail

The November CPI figures published by the Bureau of Labor Statistics (BLS) were produced under highly unusual circumstances, with October data completely missing due to the shutdown. That directly caused two key problems:

1. Broken comparability and no month-on-month analysis
With no October data as a base, this report unusually cannot provide any month-over-month changes. That means the market has no way to judge the price trend for November itself and can only compare back to September, stretching the analysis window to two months and significantly weakening both timeliness and accuracy.

2. Methodological compromises and distorted data
To fill in the missing October prices, the BLS had to rely heavily on a technique known as “carry-forward imputation.” A BLS spokesperson confirmed that key categories such as housing rents in October were effectively “carried forward” from April 2025 data – in statistical terms, equivalent to assuming there was no price change for that month.

This technical workaround directly led to unusually weak readings in one of the stickiest components of inflation: housing costs. Economists have largely taken this with a heavy dose of skepticism, with some even calling the report “riddled with holes” and insisting it must be taken “with an entire jar of salt.”

Market Reaction and Core Debates

The actual market reaction perfectly reflects this complicated sentiment. After the release, equities moved modestly higher, but rate-futures pricing for future Fed cuts barely budged. That restrained response shows the prevailing Wall Street view: this is not a “clean” data print that can be trusted as a true guide to inflation trends.

The main points of contention revolve around:

“One-off distortion” vs. “genuine trend improvement”
Most economists believe the benign numbers are largely a technical illusion caused by statistical distortions, rather than proof that underlying inflation pressures have fundamentally eased.

Structural issues still unresolved
The report does little to ease worries about two key long-term inflation drivers:

• The pass-through of tariffs to goods prices is likely to continue in the coming months.

• Services inflation remains stubborn due to a still-tight labor market.

Hassett’s Response

In the face of this data, Kevin Hassett – Director of the White House National Economic Council and a strong contender for the next Fed Chair – struck an upbeat tone. According to media reports, he described the CPI print as “shockingly good” and argued that it gives the Fed significant room to cut rates. This stance aligns with his long-standing, more dovish view that places heavy emphasis on economic data.

Whether Hassett ultimately secures the nomination, however, remains uncertain. He continues to stress that the Fed’s independence is “really, really important,” and that any rate decisions should be based on facts and data, reached through consensus within the FOMC. Meanwhile, another leading candidate, former Fed Governor Kevin Warsh, has been gaining momentum. As of mid-December, prediction markets put Warsh’s odds of being nominated at around 47%, versus roughly 41% for Hassett.

Author’s View

In my view, the U.S. November 2025 CPI report is a “distorted surprise.” While it delivers brief comfort in the form of lower headline numbers, the underlying data flaws make it an unreliable foundation for Fed decision-making. The market’s cool reaction and the broad skepticism among economists point to the same conclusion: the real battle against inflation is far from over.