By Lucia Mutikani
WASHINGTON, Dec 18 (Reuters) – U.S. consumer prices likely increased by the most in 1-1/2 years in the year to November, economists predicted, which would underscore the worsening affordability challenges confronting Americans that have been partly blamed on tariffs on imports.
The Labor Department’s Bureau of Labor Statistics will not publish month-to-month changes when it releases the delayed Consumer Price Index report for November on Tuesday after the 43-day shutdown of the government prevented the collection of October data. The October CPI release was canceled because the price data could not be collected retroactively.
The longest shutdown in history also impacted labor market data, with the government failing to publish an unemployment rate for October for the first time ever.
But the BLS will publish the year-on-year rates for the CPI and the so-called core CPI, which excludes the volatile food and energy components.
The agency publishes numerous indexes in addition to the broad CPI and core CPI. Those derived from data that does not need to be physically collected will be available, though the BLS said it expected “the number of publishable indexes to be small.”
The statistics agency has said it “cannot provide specific guidance to data users for navigating the missing October observations.” Economists advised viewing the CPI and its components on a year-on-year basis or two-month change.
“Downward inflation progress has stalled,” said Andy Schneider, a senior U.S. economist at BNP Paribas. “This largely reflects companies in goods-producing sectors passing tariff costs through into prices.”
The CPI likely increased 3.1% year-on-year in November, which would be the largest gain since May 2024, a Reuters survey of economists estimated. The CPI advanced 3.0% in the 12 months through September.
But the CPI could print below expectations as data collection was delayed late into the month, when retailers offered holiday season discounts. That could be evident in lower prices for goods like furniture and recreation goods.
“November CPI this year could capture a period that more heavily reflects holiday season discounts than a usual November, which would reflect average prices through the whole month,” said Veronica Clark, an economist at Citigroup. “If there is some abnormal weakness in November goods prices, there could be a larger rebound in these components in December.”
President Donald Trump’s sweeping import duties have raised prices for many goods, though the tariff pass-through has been gradual as businesses worked through inventory accumulated prior to the tightening of trade policy and also absorbed some of the taxes, evident in moderate new motor vehicle price increases.
TARIFFS ARE HURTING CONSUMERS
“Retailers are in the middle of the process of pushing tariffs onto consumers, and had passed on about 40% of the total by September,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “We expect that proportion to climb gradually to 70% by March and then stabilize.”
Economists say the tariff burden was falling disproportionately on lower-income households, who have little or no savings buffer and have also experienced slower wage growth relative to other workers.
Trump, who won the 2024 presidential election on promises to tame inflation, has in recent weeks alternated between dismissing affordability problems as a hoax, blaming former President Joe Biden, and promising that Americans will benefit from his economic policies next year.
The core CPI is expected to have increased 3.0% year-on-year in November. That would match September’s gain and reflect higher prices for rents and goods, excluding food and energy. Lower airfare, hotel and motel rooms could provide an offset.
The Federal Reserve tracks the Personal Consumption Expenditures Price indexes for its 2% inflation target.
The PCE price measures are calculated from some components of the CPI and Producer Price Index baskets. The PPI report for October was canceled. November’s producer inflation report will now be released in mid-January. The government is yet to set a new release date for November’s PCE price data. Both PCE price measures were well above target in September.
Fed officials last week cut the U.S. central bank’s benchmark overnight interest rate by another 25 basis points to the 3.50% to 3.75% range, but signaled borrowing costs were unlikely to fall further in the near term as they awaited clarity on the direction of the labor market and inflation.
Fed Chair Jerome Powell told reporters “it’s really tariffs that are causing most of the inflation overshoot.”
It could take some time for consumers to see lower prices from the White House’s rolling back of duties on some goods including beef, bananas and coffee.
“With the tendency for firms to revisit pricing decisions at the start of the calendar year, we see the potential for another burst of goods inflation in the first quarter,” said Sara House, a senior economist at Wells Fargo.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci )
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