Stocks Stall, Crypto Pops, Metals Surge

U.S. consumer inflation held steady in December, with the Consumer Price Index (CPI) rising 2.7% over the past year, matching economists’ expectations and reinforcing the view that inflation remains sticky but contained heading into 2026.

The Bureau of Labor Statistics reported Tuesday that headline CPI rose 0.3% month-on-month, in line with forecasts and consistent with recent monthly trend levels. The annual figure remained unchanged at 2.7%, signaling that price pressures have neither meaningfully accelerated nor eased in recent months.

Core CPI, which strips out food and energy and is seen as the better gauge of underlying inflation, increased 0.2% m/m in December, which is slightly cooler than expected, and rose 2.6% over the past year.

Inflation Holds Steady, Driven by Services and Shelter

December’s data reaffirms the broader pattern of slow-moving disinflation, with goods prices generally stable or falling while services categories including shelter, medical care, and transportation continue to push overall inflation above the Federal Reserve’s 2% target.

The roughly 2.7% annual pace signals that inflation is still stuck in the “last mile,” where progress tends to slow, even as the most volatile components have already come back down.

Economists had widely expected a firm monthly reading, in part due to the normalization of data collection after the 43-day federal government shutdown disrupted prior CPI reports and led to unusually soft figures earlier in the autumn.

Softening Labor Market and Mixed Consumer Signals

The inflation release lands amid signs of cooling economic momentum. 

December payroll growth came in weaker than expected, capping the slowest calendar-year job gains since the post-pandemic recovery. Consumer sentiment has inched higher in recent months, but confidence levels remain well below where they stood before 2025, reflecting continued caution among households.

Major forecasters, including The Conference Board and BNP Paribas, expect U.S. GDP growth to stabilize around 2%-3% in 2026, with inflation gradually easing as the year progresses. 

The ongoing moderation in hiring and wage growth could eventually help reduce services-sector inflation, though those effects have yet to meaningfully appear in the CPI data.

Fed Outlook: No Shift Expected After an In-Line Report

With December’s CPI broadly matching expectations, analysts say the report is unlikely to alter the Federal Reserve’s near-term policy stance.

Fed officials, including New York Fed President John Williams, have recently suggested that current interest-rate settings are “well positioned” to guide inflation back to target. Some major banks, including JPMorgan, have even argued that the Fed may avoid cutting rates entirely in 2026 if inflation proves stubborn.

The December CPI reading gives the Fed little reason to accelerate future policy easing, but the softer core monthly reading may reinforce the view that inflation is slowly trending in the right direction.

Markets will now shift focus toward the January CPI data, PCE inflation, and the March FOMC meeting for clearer signals on the timing of any eventual policy adjustments.

Market Reaction

Much of the crypto market reacted positively to the CPI release. The market’s leader, Bitcoin (BTC), jumped 0.3% shortly after the release, data from CoinCodex shows.

BTC price (Source: CoinCodex)

Similarly, the rest of the top 10 cryptos recorded minor gains in the minutes after the release. Overall, the total crypto market cap has risen over 1% in the past 24 hours.

Gold price (Source: CoinCodex)

Gold, which has been on a medium-term rally and has set back-to-back all-time highs in recent months, trades at $4,613.22 at the time of writing, near record levels.

The price of silver surged over 2% in the last hour to outperform gold following the release.  

Meanwhile, US stocks saw mixed reactions to the latest CPI data.

What Comes Next

December’s CPI report keeps the broader inflation narrative intact: progress is happening, but slowly. 

With core inflation still running above target, albeit gradually cooling, attention will now turn to whether easing labor-market conditions begin exerting meaningful downward pressure on services prices early in 2026.

Economists expect the first half of 2026 to remain defined by slow disinflation, modest growth, and a patient Federal Reserve, with today’s CPI reading doing little to disrupt that outlook.

However, Fed chair Jerome Powell said last month that he expects the peak impact of tariffs on price pressures to materialize in the first quarter of the year, meaning that the next couple of inflation reports will be even more closely scrutinized. 

But after that impact fades, many officials are forecasting inflation to resume its journey back to the central bank’s 2 percent target.