US inflation appears to be picking up again, with economists closely watching the next Consumer Price Index (CPI) release after concerns that earlier data understated price pressures. The November inflation report showed signs of cooling, but those figures were affected by data collection problems linked to the federal government shutdown.
During the shutdown, the Bureau of Labor Statistics was unable to gather a full set of price data, relying instead on assumptions and partial information. Economists say this likely pushed reported inflation lower than underlying conditions justified, creating a misleading snapshot that is now expected to correct.
Core CPI, which excludes food and energy, is widely expected to rise on a month-to-month basis, reinforcing the view that inflation pressures persist rather than having been resolved. That outlook complicates policymaking for the Federal Reserve, which is already navigating unclear signals amid political pressure, revisions to data and a weakening labour market.
At the same time, job growth has slowed and wage gains are cooling, raising concerns about a broader economic slowdown. Consumer spending, however, remains relatively strong, supported increasingly by credit. Household debt, particularly credit card borrowing, continues to climb, sustaining demand but also increasing longer-term financial risks.
With retail sales, housing data, producer prices and industrial output all due for release, policymakers face a delicate balancing act: easing inflation without triggering job losses or worsening debt strains. As highlighted by World Affairs In Context, the coming data will be critical in determining whether inflation proves stubbornly persistent and how long interest rates are likely to remain on hold.
