American November inflation "distorted," economists point directly to statistical methods not reliable enough.

Inflation data for November in the United States unexpectedly fell well below expectations, breaking the recent trend of "sticky strong" inflation. After the data was released, the financial markets reacted quickly: US stocks rose, US bond yields fell, the market's bets on a rate cut by the Federal Reserve increased, but many economists expressed doubts about the reliability of this report. Data released by the US Bureau of Labor Statistics (BLS) shows that the Consumer Price Index (CPI) rose 2.7% year-on-year in November, while the core CPI, which excludes food and energy, only rose 2.6% year-on-year, both significantly below market expectations. Previously, a Dow Jones survey showed that economists generally expected the overall inflation rate for November to be 3.1% and the core inflation rate to be 3.0%. However, the statistical background of this data is quite unique. Due to the US government shutdown, the release of the November CPI data was delayed by 8 days, and more importantly, the October CPI data was directly canceled, resulting in the BLS having to make certain technical assumptions about the previous price trends when compiling the November inflation data, and these method assumptions were not clearly explained in the report. Michael Gapen, Chief US Economist at Morgan Stanley, pointed out in a research report that this unexpected "decrease in inflation" reflects a simultaneous weakening of prices for goods and services, but a considerable part of this may be due to statistical method issues. He believes that BLS may have used previous prices in some categories, effectively assuming zero inflation, making the November data "noisy" and difficult to draw strong conclusions from. If technical factors are the main reason, inflation may rise again in December. In terms of specifics, economists generally focus on the key indicator of "Owner's Equivalent Rent" (OER). OER is an important component of measuring housing inflation and has a very high weighting in the CPI. Alan Detmeister, an economist at UBS, said that the price changes for OER in October seemed to have been "set at zero," thus lowering the overall inflation reading. Krishna Guha of Evercore ISI further analyzed that in approximately one third of the city samples used to calculate OER, BLS has "directly inputted zero inflation" in multiple categories. He pointed out that if this method introduces downward bias, the Federal Reserve will obviously not simply accept it when evaluating housing service inflation. Detmeister also warned that this impact may continue in the coming months. He expects that the related bias may not be corrected until the April CPI data released in May next year which may show a significant rebound in OER and tenant rent. Before that, these two price levels may continue to be underestimated. Stephanie Roth of Wolfe Research also pointed out that the increases in rent and OER over a two-month period were only about 0.06% and 0.13% respectively, significantly lower. She also mentioned that with BLS data collection taking place in late November, which is a period with concentrated holiday discounts, some categories of goods may be under additional downward pressure. Roth believes that the market currently interprets this inflation data as a clear "dovish signal," but considering the many technical issues at the statistical level, the Federal Reserve is likely to reduce the weight of this reading. She pointed out that although inflation has not significantly risen due to tariffs, with the disruptions related to the government shutdown fading, future data may see a "rebound to normal." In fact, before the data was released, there were certain doubts within Wall Street about this report, with some institutions warning in advance that the government shutdown could bring systematic biases. As the trading session progressed, the initial market enthusiasm cooled off, US stocks retreated from their highs, technology stocks remained relatively strong, while sectors more oriented towards the economic cycle, such as banks, turned downward; US bond yields also rebounded from intraday lows.