Physical goods excluding food and energy—often referred to as “core” goods—experienced a notable slowdown. Annual inflation for this category slipped to 1.4% in November from 1.5% in September, countering earlier expectations that trade tariffs would keep goods prices elevated well into 2026.
Analysts cautioned that the headline improvement should be interpreted in light of unusual survey conditions. Thomas Ryan, North American economist at Capital Economics, described the report as atypical and suggested that subsequent releases will be needed to confirm any sustained disinflation trend.
Tariffs, wages and the Federal Reserve’s outlook
Before the November reading, CPI inflation had been inching upward since April, when the rate stood at 2.3%. Some economists contend that the latest pullback may prove temporary once regular data collection resumes. Others noted that softening wage gains could place additional downward pressure on service-sector inflation over time, helping the Federal Reserve reach its price-stability goals.
Market strategists observed that recent Fed communications have placed greater emphasis on a cooling labor market than on price metrics. Weaker payroll growth and slower earnings gains are seen as potential catalysts for interest-rate reductions in 2026, even if headline inflation readings remain volatile.
Consumers still face elevated price levels
Lower inflation does not necessarily translate into lower prices. Many households continue to wrestle with high grocery and fuel bills, and sentiment surveys highlight ongoing discomfort with the cost of living. In a University of Michigan poll conducted last month, 47% of respondents cited the negative impact of high prices on their personal finances, up from 34% in January 2025.
Food items were among the most persistent sources of strain. Uncooked beef roasts posted an annual price increase of about 21% in November, a jump tied to cattle supplies that reached their lowest point since the early 1950s. Coffee prices climbed roughly 19% year over year amid extreme weather in key growing regions and tariffs imposed on Brazilian imports. Banana prices rose about 7% over the same period.
Imagem: Internet
In response to mounting political pressure over grocery costs, the White House last month exempted several agricultural products—including beef, coffee, cocoa and bananas—from earlier tariff rounds. Economists differ on how quickly the policy shift might filter through to retail shelves; supply-chain contracts and existing inventories could delay any meaningful relief for shoppers.
Implications for core goods and services
Earlier in 2025, many forecasters assumed that tariffs would cause a sustained uptick in core goods inflation. November’s reading challenges that view, though analysts noted that one month’s data are insufficient to establish a new trend. Core services inflation, typically more sensitive to labor costs, may moderate if wage growth continues to ease.
Tom Porcelli, chief economist at Wells Fargo, characterized the report as “messy,” pointing out that once the temporary distortions are stripped away, underlying inflation may not have shifted substantially in either direction. Joe Seydl, senior markets economist at J.P. Morgan Private Bank, added that the Fed’s focus on employment metrics suggests monetary policy will hinge primarily on labor-market developments rather than the latest CPI surprise.
What to watch next
The BLS plans to return to its standard collection schedule for the December CPI release, offering a clearer view of inflation trends as the year ends. Market participants will also monitor forthcoming wage, employment and retail-sales data for additional clues about consumer purchasing power and potential Fed action in 2026.
Until more comprehensive figures emerge, analysts remain cautious. While November’s softer reading provides tentative relief, the underlying price level continues to rise, and households have yet to feel consistent improvement in everyday affordability.
Crédito da imagem: CQ-Roll Call, Inc.
