Inflation Data Faces Credibility Questions: 'This Is Totally Inexcusable'
Market frustration with the November Consumer Price Index is not about how low inflation printed. It’s about whether the number can be trusted at all.
The report showed that annual CPI inflation slowed to 2.7% in November from 3% in September. Indeed, this reinforces President Trump’s narrative that inflation is “essentially gone.”
Yet economists and inflation watchers argue that the figure was mechanically distorted by the federal government shutdown, which halted data collection in October. As a result, the release leaves a weak and potentially misleading signal of underlying trends.
Still, stocks rallied, with the tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) rising almost 2%, and traders bolstered expectations for at least two Fed’s rate cuts next year.
But at the center of the controversy is shelter inflation, which captures rents and owners' equivalent rent (OER). It accounts for roughly one-third of the CPI basket, and drove much of the apparent cooling.
Because the Bureau of Labor Statistics lacked October survey-based prices, it carried forward September levels, effectively assuming zero inflation for a missing month and compressing shelter price increases in November.
This decision introduced distortions that make the data about as reliable as wearing sunglasses at night.
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‘No World In Which This Was a Good Idea'
Goldman Sachs chief economist Jan Hatzius said that choice likely exerted a significant drag on the November CPI, particularly in rent and OER.
"Rent and OER are calculated based on a six-month rotating panel," Hatzius explained.
As a result, the November monthly increase reflects an average of price changes since May, applied to an October index level that the BLS assumed was flat relative to September.
"The shelter components only increased by one month's worth of rent inflation between September and November," Hatzius said, noting that this methodology likely understated true shelter inflation.
Hatzius said the same methodological choices that depressed November inflation are likely to create artificial rebounds later on.
“Today's reading could be partially offset by a rebound in the shelter components in the April CPI, six months after October,” Hatzius said.
Omair Sharif, the founder and president of Inflation Insights, called the BLS approach "totally inexcusable.” The shelter numbers only make sense if October inflation is zero.
"I am sure they have a good technical explanation for this," Sharif said, "but there is just no world in which this was a good idea."
Former Obama administration economist and Harvard professor Jason Furman also criticized the shelter calculation, calling it a "big judgment error" that likely understated inflation.
However, Furman rejected the idea that politics played a role.
"If anything, the opposite," he said. "They stuck to algorithm rather than using judgment."
Inflation Data Quality Concerns
Beyond shelter, some economists argue the November CPI reflects broader data collection problems.
According to Truflation, a real-time inflation data provider, there are signs of incomplete sampling and missing data, particularly because price collection did not begin until Nov. 14.
Some regional data appear entirely absent, while other areas show unusually sharp declines.
Food at home inflation dropped from 2.7% year over year in September to 1.9% in November — a move Truflation described as difficult to reconcile with observed pricing trends.
Services inflation also fell sharply, from 3.5% to 3%, driven in part by a reported 4.1% year-over-year decline in hotel lodging prices — a result Truflation said conflicts with private-sector data and industry indications.
"Sampling and data collection questions raise validity on the data for this month," the firm said, adding that food and shelter were the largest outliers.
What It Means For Markets And Policy
Despite the headline cooling and the positive market reactions, most economists caution against drawing strong conclusions from this CPI print.
For investors and policymakers, the message is clear: November's inflation data say more about statistical mechanics than about the true state of price pressures, leaving December and early-2026 releases to determine whether disinflation is intact.
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