The recent report on inflation in the US published by the Bureau of Labor Statistics indicated that inflation rose by only 2.7% in November. The number was surprising given the anecdotal evidence we have about consumer dissatisfaction with rising prices.
A closer look at the data reveals that the number is not trustworthy. The Bureau publishes the data it uses to calculate the monthly inflation number and the chart from November is filled with holes.
| Seasonally adjusted changes from preceding month | Un- adjusted 12-mos. ended Nov. 2025 | |||||||
|---|---|---|---|---|---|---|---|---|
| May 2025 | Jun. 2025 | Jul. 2025 | Aug. 2025 | Sep. 2025 | Oct. 2025 | Nov. 2025 | ||
| All items | 0.1 | 0.3 | 0.2 | 0.4 | 0.3 | – | – | 2.7 |
| Food | 0.3 | 0.3 | 0.0 | 0.5 | 0.2 | – | – | 2.6 |
| Food at home | 0.3 | 0.3 | -0.1 | 0.6 | 0.3 | – | – | 1.9 |
| Food away from home(1) | 0.3 | 0.4 | 0.3 | 0.3 | 0.1 | – | – | 3.7 |
| Energy | -1.0 | 0.9 | -1.1 | 0.7 | 1.5 | – | – | 4.2 |
| Energy commodities | -2.4 | 1.0 | -1.9 | 1.7 | 3.8 | – | – | 1.2 |
| Gasoline (all types) | -2.6 | 1.0 | -2.2 | 1.9 | 4.1 | -2.1 | 3.0 | 0.9 |
| Fuel oil | 0.9 | 1.3 | 1.8 | -0.3 | 0.6 | – | – | 11.3 |
| Energy services | 0.4 | 0.9 | -0.3 | -0.2 | -0.7 | – | – | 7.4 |
| Electricity | 0.9 | 1.0 | -0.1 | 0.2 | -0.5 | – | – | 6.9 |
| Utility (piped) gas service | -1.0 | 0.5 | -0.9 | -1.6 | -1.2 | – | – | 9.1 |
| All items less food and energy | 0.1 | 0.2 | 0.3 | 0.3 | 0.2 | – | – | 2.6 |
| Commodities less food and energy commodities | 0.0 | 0.2 | 0.2 | 0.3 | 0.2 | – | – | 1.4 |
| New vehicles | -0.3 | -0.3 | 0.0 | 0.3 | 0.2 | 0.1 | 0.2 | 0.6 |
| Used cars and trucks | -0.5 | -0.7 | 0.5 | 1.0 | -0.4 | 0.7 | 0.3 | 3.6 |
| Apparel | -0.4 | 0.4 | 0.1 | 0.5 | 0.7 | – | – | 0.2 |
| Medical care commodities(1) | 0.6 | 0.1 | 0.1 | -0.3 | -0.1 | – | – | 1.1 |
| Services less energy services | 0.2 | 0.3 | 0.4 | 0.3 | 0.2 | – | – | 3.0 |
| Shelter | 0.3 | 0.2 | 0.2 | 0.4 | 0.2 | – | – | 3.0 |
| Transportation services | -0.2 | 0.2 | 0.8 | 1.0 | 0.3 | – | – | 1.7 |
| Medical care services | 0.2 | 0.6 | 0.8 | -0.1 | 0.3 | – | – | 3.3 |
Note that there was no data for many of the components for both October and November, which means that those components were set to zero prices. Critically, the shelter component, which is a very large part of the formula. CNBC reports:
“Economists were zooming in on one particularly important subset in the data as problematic: owners’ equivalent rent. This is a key part of calculating the inflation seen in the housing market.
“UBS economist Alan Detmeister said the price changes in October for the OER appear to have been ‘set to zero.’
“Evercore ISI’s Krishna Guha, digging deeper, said it appears the BLS ‘put in zero inflation in multiple categories’ while calculating the OER for the approximately one-third of cities used.
“’To the extent that it introduces a downward bias, the Fed would be mindful of the risk of taking the data on housing services inflation at face value,’ he wrote in a Thursday note.”
The report is worthless, and it would be a serious mistake to use the 2.7% increase as the basis for any economic decision. The Bureau of Labor Statistics should simply admit that it lacked the data and withdraw the report. Bad data is significantly worse than no data.
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