Core CPI undershoots forecasts in December, easing pressure on the Fed

Key Takeaways

• The core inflation rate for December rose by 0.2%, below the expected 0.3%.
• The yearly increase for the Consumer Price Index remains steady at 2.7%.

US inflation growth slowed in December 2025, with the core CPI climbing 0.2% on the month, missing economists’ estimates, the Bureau of Labor Statistics reported Tuesday.

On an annual basis, core CPI rose 2.6%, matching a four-year low and reinforcing signs that inflation is moderating.

Overall consumer prices, including food and energy, rose 0.3% for the month, leaving the year-over-year increase at 2.7%, unchanged from November. Energy costs edged up, driven by higher natural gas prices, while food prices increased despite a drop in egg prices. Shelter costs remained the largest contributor to overall inflation.

November’s CPI was likely affected by the unusually long government shutdown, which delayed the collection of October prices and led to assumptions about housing costs, economists said, with holiday discounts potentially contributing to the distortion.

The softer-than-expected reading will likely give the Fed more confidence to pause further rate cuts.

Economists say the data suggest underlying inflation is moderating, reducing the need for immediate monetary stimulus, though the Fed will still weigh tariff pressures and labor market trends.

Following the release, equities futures advanced and Treasury yields fell. Bitcoin stayed rangebound around $92,000, showing minimal response to the news.