The release of November’s U.S. consumer price data on Thursday delivered an unexpected surprise, showing inflation cooling more than economists had anticipated and breaking the recent pattern of stubborn price pressures.

Financial markets reacted swiftly. Stock prices climbed, Treasury yields declined, and expectations grew that the Federal Reserve might consider cutting interest rates sooner than previously thought. At the same time, many economists expressed confusion and caution over how to interpret the figures.

According to the Bureau of Labor Statistics, the consumer price index rose 2.7 percent from a year earlier in November. Core inflation, which excludes the volatile categories of food and energy, came in even lower at 2.6 percent. Both readings were well below market forecasts. Economists surveyed by Dow Jones had expected headline inflation of 3.1 percent and core CPI of 3 percent.

However, the data came with unusual circumstances. The November report was released eight days later than scheduled due to the U.S. government shutdown. More significantly, October inflation data was never published, forcing the BLS to rely on methodological assumptions to fill in gaps from the missing month.

Those assumptions were not clearly explained in the report, leaving analysts uncertain about how much weight to place on the results.

Michael Gapen, chief U.S. economist at Morgan Stanley, said the downside surprise reflected softness across both goods and services but warned that technical issues may have played a major role. He noted that in some categories the BLS may have simply carried prices forward, effectively assuming zero inflation.

Gapen described the November data as unusually noisy and said it was difficult to draw firm conclusions from it. If the weakness is mainly due to these technical factors, he added, inflation could pick up again in December.

A major point of concern among economists centered on owners’ equivalent rent, a crucial component in measuring housing-related inflation.

Alan Detmeister, an economist at UBS, observed that price changes for owners’ equivalent rent in October appeared to have been set at zero. Krishna Guha of Evercore ISI went further, suggesting that the BLS may have recorded zero inflation across multiple categories when calculating owners’ equivalent rent for roughly one-third of the cities included in the sample.

Guha cautioned that if these assumptions introduced a downward bias, Federal Reserve officials would likely be careful not to take the reported housing inflation figures at face value.

Detmeister warned that the effects of this issue could persist for several months. He said that while the weakness should eventually reverse, possibly with large increases in owners’ equivalent rent and tenants’ rents showing up in the April CPI released in May, the data in the meantime would likely understate true housing inflation.

Stephanie Roth of Wolfe Research estimated that rent rose about 0.13 percent and owners’ equivalent rent increased roughly 0.27 percent over the two-month period, translating into modest month-over-month gains of approximately 0.06 percent and 0.13 percent, respectively.

The Bureau of Labor Statistics has been contacted for comment on the methodological questions raised by economists.

Beyond housing, analysts identified other factors that may have distorted the report. Roth pointed out that the BLS conducted its data collection later in November, a period when holiday discounts are more widespread, which could have pushed prices lower in certain goods categories.

She noted that while markets initially interpreted the data as signaling a more accommodative stance from the Fed, policymakers are likely to discount this reading due to its technical quirks. Roth added that although inflation does not appear to be accelerating sharply due to tariffs, a rebound is likely once the data normalizes following shutdown-related disruptions.

Skepticism toward the report had already been building ahead of its release, with some Wall Street analysts warning that the government shutdown, which ended in mid-November, could introduce bias into the inflation numbers.

As trading progressed, early market enthusiasm faded. Stock indexes pulled back from their highs, with gains largely concentrated in technology shares. More economically sensitive sectors, including banks, moved lower. Treasury yields also rose off their intraday lows, reflecting the market’s reassessment of the data.