The U.S. Consumer Price Index for November came in flat as expected, but a jump in the core rate has economists a bit nervous.

“With all other official data showing declining inflation, and even borderline deflation, the 0.4% rise in U.S. core CPI in November stands out like a very sore thumb,” says BMO Nesbitt Burns, noting, “Every once in a while, a number is so difficult to believe it is ignored by the markets. This month’s CPI may be one of those cases.”

BMO isn’t buying the numbers, it notes, “The report asks us to believe that hotel charges went up 1.7% in November. In the world we inhabit, hotel chains are desperate to fill rooms amid the lowest occupancy rates in a generation. Meantime, vehicle prices rose even though Detroit has embarked on a major giveaway spree. Medical care cost hikes cannot be denied. And tobacco price hikes, entirely legitimate but not reflecting strong demand, added to the perfect storm effect. All we can say is, this too shall pass.”

Royal Bank economists aren’t getting scared by the surprise. “The up-tick in core CPI inflation is unlikely to spook investors or the Federal Reserve,” it says. “Core CPI has remained steady all year and based on price inflation in intermediate goods appears set to moderate early next year. Excess capacity will keep prices and profit margins on the defensive for most of next year and is expected to lead core CPI inflation down to roughly 2% by the mid-point of year.”

CIBC World Markets agrees, saying, “The importance of one above-trend inflation number should not be overstated. Unemployment, at 5.7% in November, is likely to rise further in coming months. While that will help to cap labour costs, the risk is that a recovering economy and/or lower dollar could see inflation emerge as an issue 6-12 months down the road. That is particularly the case if productivity growth subsides from its still fairly strong pace.” Although it notes that markets saw the strong CPI core number as weighing against further Fed easing.

Nevertheless, it says, “While the CPI data may have some bearing on the Fed’s course, a more important determinant of whether late January sees a further easing will be the December jobs report.”

“The CPI was taken in stride by the markets,” says BMO. “If this awful report is later backed up by other rising inflation data, it would be bad news indeed. For now, we recommend closing your eyes and ignoring it.”