Today’s CPI print gave the market exactly the kind of disinflationary energy it’s been craving, even if the data arrived with a few dents from the government‑shutdown delay. The signal was loud and clear; disinflation is intact and the runway into 2026 just got a little smoother.

1. Another cooler‑than‑expected inflation print … and a meaningful one.

Headline CPI rose 2.7% year over year, below the 3.1% economists had penciled in. Core CPI landed at 2.6%, also under the 3.0% consensus. That’s a downside surprise to both measures, with improvements in the sub-components the Fed watches closely. Markets didn’t waste a minute leaning dovish.

2. Categories tell the story: softening breadth with a notable drop in shelter.

The two‑month data window showed broadening disinflation, with declines across lodging, recreation, and apparel. The standout was shelter, which posted its largest drop in over a year, falling from 3.6% to 3.0%. That kind of move matters: shelter has been one of the most persistent contributors to sticky inflation, and seeing it finally break lower adds real credibility to the cooling trend.

Food and energy still pushed higher on a year‑over‑year basis, reminding us that inflation isn’t entirely free of heat. But the direction of travel is clear: the categories that had been the most stubborn are now easing, and shelter’s rollover tracks the current challenges facing housing.

3. The big caveat: this wasn’t a “clean” CPI.

Because the 43‑day government shutdown prevented any October data from being collected, the BLS effectively stitched November’s release together using partial November survey data and non-survey sources. That means no month‑to‑month comparisons, a thinner sampling window, and results that could be skewed by heavy late‑November discounting. Still, even with those distortions, the 2.7% / 2.6% headline/core combo ran meaningfully cooler than expectations and markets treated it as such.

4. The market’s read: dovish oxygen everywhere.

The softer‑than‑expected CPI fueled immediate speculation around a more aggressive Fed easing path. Futures pushed up the probability of an early‑2026 cut, and rate‑sensitive assets rallied. Investors expect at least two rate cuts next year, but Powell says the CPI data “may be distorted.” Moving into Q1, the Fed can sit back and binge-watch economic results, waiting for the next episode to drop before making any big moves.

5. What matters from here: signal vs. noise.

Two things can be true at once:

• This print may be artificially soft because of holiday discounting and missing October data.
• It’s still a clear directional improvement in the inflation trend — and that matters more for markets than perfect statistical purity.

A closing thought …

Today’s CPI report is a muddled, noisy, possibly distorted step in the right direction. The big picture: inflation is cooling, the Fed is likely to cut, and the market is happy. But don’t get too excited — next month’s data will tell us if this is real or just a statistical blip.