The U.S. Bureau of Labor Statistics released updated data showing that inflation unexpectedly slowed in November, increasing by 2.7% from a year earlier.
The government's last inflation report had shown inflation was at 3% for the 12-month period ending in September. There were some gaps in data, which could explain the unexpected drop in inflation as the BLS did not collect data during the government shutdown.
Last week, Federal Reserve Chair Jerome Powell said the U.S. economy was leaning toward higher inflation rates in goods, mainly due to higher tariffs. He noted, however, that inflation for services could drop due to a softening job market.
Over the last decade, prices have generally increased at a rate of 3.5% per year. Over the last 20 years, consumer inflation has typically risen by 3.3% annually. The Federal Reserve, however, has aimed to keep annual inflation at approximately 2%.
Yale University’s Budget Lab issued a report, estimating tariffs add about $1,400 to annual expenses for the median U.S. household, with costs varying by income level. Clothing, electronics and metal goods tend to be among the most impacted categories, according to Yale.
Trump has framed the tariffs as a way to generate revenue for the government and boost U.S. manufacturing jobs. The Treasury Department reported in September that customs duties brought in $195 billion during the first three quarters of the fiscal year.
Tariffs, a tax on companies importing goods into the United States, are often passed on to consumers when businesses raise prices to offset the added expense. Some companies have said they try to absorb the costs, but many have not.
Food prices increased 2.6% in November compared to a year earlier, while energy costs increased by 11.3%. Shelter prices increased 3% in November compared to the previous year.
