{"id":4676,"date":"2025-11-07T19:14:51","date_gmt":"2025-11-07T19:14:51","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=4676"},"modified":"2026-04-02T23:10:37","modified_gmt":"2026-04-02T23:10:37","slug":"feds-fog-thickens-with-no-october-inflation-data","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-analysis\/feds-fog-thickens-with-no-october-inflation-data\/","title":{"rendered":"Fed’s fog thickens with no October inflation data"},"content":{"rendered":"\n
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We are now officially experiencing the longest US government shutdown in history as of Wednesday, November 5th when the shutdown entered its 36th day. As the shutdown continues, we will not be getting any new government data next week. We have still opted to publish forecasts for the releases that we will be missing (highlighted below in red), but as we begin to miss consecutive months of data (as is the case for PPI and retail sales), these are lower conviction forecasts based on our assumptions for prior months (for which we did not get data). <\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

The Fed would have been most closely watching CPI data this coming week and this is an indicator where visibility will most certainly be foggy in the months to come. Once the government shutdown is over, data releases will be published with a lag. Since roughly two-thirds of price data feeding into the CPI measure is collected by personal visits by data collectors to bricks and mortar stores (and since we know that these workers are furloughed and in-person data collection did not happen in October), there is a chance that the October release is either canceled altogether or that the majority of October data is imputed <\/a>\u2013 which jeopardizes the quality of the report. As the shutdown stretches into November, we are becoming increasingly concerned that we could see this for a second consecutive month. There is a real possibility that the Fed goes into the December 10th meeting with limited visibility on two months of inflation data \u2013 which we expect increases the likelihood of a December pause. Chair Powell himself has acknowledged that a December pause is not off the table<\/a>, stating, \u201cWhat do you do if you are driving in the fog? You slow down!\u201d<\/p>\n\n\n\n

We continue to forecast mounting core goods pressures alongside core services in the near-term. Still, in October we expect to see a modest uptick in core of +0.25% m\/m. <\/strong>We have witnessed early signs of tariff pressures building in trade-exposed sectors including apparel, home furnishings, and motor vehicle parts and equipment to-date. Still, prices for other trade-exposed sectors, new vehicles, for example, have been largely flat so far. When we account for tariffs, we think that the inventory buildup coupled with the desire of companies to maintain market share heading into the holidays will mean that we will not see a material spike in prices until the new year. <\/p>\n\n\n\n

While the September data posted a downside to both core and headline inflation, this was predominantly driven by weak growth in the owners’ equivalent of rent (CPI) component<\/a> of the CPI basket. Home price data from the National Association of Realtors \u2013 where median sale prices typically lead OER<\/a> by 22 months \u2013 suggests that this was likely a one-off and is not expected to continue into October. We expect to continue to see pressures mount in core goods and services in tandem. Headline will be helped this month by a pullback in gasoline prices. <\/p>\n\n\n\n

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Outside of CPI, here are the other indicators that we are missing out on:<\/p>\n\n\n\n