US November CPI below expectations, but potential for "statistical distortion" exists

As the US November Consumer Price Index (CPI) increase fell below market expectations, some analysts pointed out that this data might be underestimated due to technical factors. This adds uncertainty to the interpretation of the recent slowdown in inflation trends.

On December 19th, local time, Federal Reserve Bank of New York President John Williams stated in an interview with CNBC that some of the November consumer price data might be subject to statistical distortion. He specifically noted that due to technical issues during data collection, the price increases of certain items might be underestimated. In fact, the October consumer price report was not released earlier due to delays caused by the federal government shutdown affecting the Bureau of Labor Statistics’ data collection.

Such statistical issues could significantly impact the assessment of inflation trends at the end of this year and the beginning of next year. President Williams estimates that these technical factors might have suppressed the CPI increase by about 0.1 percentage points. However, he added that subsequent indicators to be released in December will clarify the extent of the distortion.

On the other hand, aside from these technical factors, the slowdown in some price categories has been positively received. President Williams believes that the recent deceleration in prices is part of an “disinflation” trend—that is, a steady decline in the inflation rate. The Federal Reserve has maintained a rate hike stance to bring this year’s inflation rate back to target levels, and the upcoming CPI data could be a key indicator influencing future monetary policy.

The November Consumer Price Index released on December 18th showed a year-over-year increase of 2.7%, significantly below the market expectation of 3.1%. This not only suggests that the Fed’s tightening measures have had some effect but also raises questions about the credibility of the data itself. Particularly, despite concerns that recent trade measures such as additional tariffs on China might stimulate price increases, some analysts believe this indicator marks a temporary pause on that issue.

Looking ahead, the upcoming December Consumer Price Index, considering the possibility of technical distortion, will attract more market attention. The Federal Reserve may also use this data to better assess inflation trends and consider corresponding interest rate policy adjustments. The current situation of statistical uncertainty coexisting with an encouraging inflation slowdown trend requires the Fed to make more precise interpretations and judgments in its policy decisions.