On 3 November 2026, Democrats secured majorities in both the House and Senate, with 89% of voters citing the cost of living as a major or crucial factor in their vote. The November CPI report, due on 10 December, is unlikely to ease those concerns. Turnleaf’s top-down nowcast puts core inflation at 2.94% YoY NSA, up from 2.6% in September, and headline inflation at 3.74%. Our bottom-up model projects slightly higher readings of 2.98% for core and 3.89% for headline.
The projected rise in annual core inflation largely reflects base effects, although some components show firmer current momentum. Government shutdown disruptions to price collection held down the core price index in October and November 2025. On a Turnleaf counterfactual in which core prices rose at their January to September 2025 average of 0.25% MoM SA in both months, the index ended November 2025 about 0.3% below that path, because the recorded two-month increase was only 0.16%. That shortfall has lowered every annual core rate since and drops out of the comparison in November 2026, lifting the annual rate without a corresponding increase in current price momentum. Our top-down November nowcast of 0.24% MoM SA is in line with the 2026 average. Headline inflation stays high because of motor fuel, which contributes 1.22 percentage points to our bottom-up November nowcast and has risen amid the Iran war. Turnleaf expects the new Democratic majorities in Congress to have limited scope to bring inflation down while the conflict keeps oil prices elevated.
Figure 1. Headline and core CPI, % YoY NSA. Released BLS data, Turnleaf reconstruction of the missing October rates, and the 11 November 2026 top-down, bottom-up and benchmark paths to October 2027. The headline benchmark is built from EIA and Philadelphia Fed forecasts, and the core benchmark from Cleveland Fed and Philadelphia Fed forecasts.
A Missing Number in a Cost-of-Living Election
Both forecasts build on the October 2026 CPI, released on 10 November, which showed headline prices rising 0.4% MoM SA and core prices increasing 0.3%. However, the release contained no annual inflation rates because the Bureau of Labor Statistics (BLS) did not collect prices in October 2025 during the government shutdown. One week after an election dominated by cost-of-living concerns, the latest official figures therefore offered no year-on-year measure of inflation.
To fill this gap, Turnleaf reconstructed the missing comparison base, putting October headline inflation at 3.8% YoY NSA and core at 2.6% (Figure 1). Energy is a major driver of this difference, although the 1.2 percentage point gap does not directly measure its contribution because core inflation uses a separate basket. Our November bottom-up model provides a more precise decomposition, attributing 1.27 percentage points of headline inflation to energy, including 1.22 percentage points from motor fuel and 0.05 from other energy. Gasoline prices are up 37.4% YoY following the sharp increase in energy costs since the war with Iran began on 28 February 2026. The resulting energy shock pushed headline inflation from 2.4% in February to a peak of 4.2% in May, before it eased to 3.7% in September.
Fuel Pulls the Month Down and Holds the Year Up
To isolate energy’s contribution, we use our bottom-up CPI model, which forecasts more than two dozen components individually and aggregates them using their CPI basket weights. For October, the model estimated headline inflation at 0.34% MoM SA, close to the unrounded official reading of 0.35%. Across 106 one-month-ahead nowcasts from January 2018 to October 2026, the bottom-up core model (NSA) achieved an RMSE of 0.15 percentage points, compared with 0.22 for a benchmark built from Cleveland Fed and Philadelphia Fed forecasts. It also correctly predicted whether the monthly rate would rise or fall from the previous month 75% of the time, against 63% for the benchmark.
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