Data from the US Bureau of Labor Statistics showed inflation remained broadly stable in December, keeping pressure on the Federal Reserve to continue its rate-cutting cycle into the first quarter.
Monthly headline CPI rose 0.3% in December, a tenth faster than forecast and above November’s 0.2% increase. The unrounded print was 0.31%. Core CPI, which excludes food and energy, rose an in-line 0.2%, undershooting the 0.3% consensus. The unrounded core reading was 0.239% m/m.
The BLS said shelter was the largest positive contributor, rising 0.4% m/m, while food prices climbed 0.7% and energy costs grew 0.3%.
On an annual basis, headline inflation held at 2.7%, matching estimates and was unchanged from November. Core prices rose 2.6% y/y, a tenth softer than forecast but in line with the prior month, marking it the slowest annual core rate since 2021.
Looking at the monthly core breakdown, statisticians said upward pressure came from recreation, airline fares, medical care, apparel, personal care, and education. These gains were partly offset by declines in communication, used cars and trucks, and household furnishings and operations.
Analysts highlighted December’s 0.294% rise in core services inflation, the fastest pace since August, while core goods prices fell 0.002%, the weakest reading since May.
Kathy Bostjancic, chief economist at Nationwide, said the report supported her view that the impact of tariffs on goods prices will fade in 2026. On services inflation, she added: “We continue to look for further disinflation in services inflation in 2026.”
Core CPI services excluding Owners’ Equivalent Rent (OER) — often referred to as the “supercore” measure — rose 0.288% in December, accelerating from a 0.070% increase in November. The metric is closely watched by economists as it is considered most sensitive to labour costs and wage growth.
Nationwide reiterated its view that inflation will peak in the first half of 2026 before trending lower in the second half of the year. The firm said this outlook, alongside expectations of a more dovish Fed chair following the end of Fed Chair Jerome Powell’s term in May, would pave the way for a further 50 basis points of rate cuts starting in June.
Since the turn of the year, investors have also heard from several Fed officials on the inflation outlook.
Most recently, John Williams, president of the Federal Reserve Bank of New York, said policy was “well-positioned” to help return inflation to the Fed’s 2% target while stabilising the labour market.
Meanwhile, Minneapolis Fed President Neel Kashkari said services inflation and labour-market slack remain the key swing factors for future policy decisions, adding that his best guess was that policy was “pretty close to neutral right now.”
BMO Capital Markets’ Ian Lyngen said inflation had taken a backseat to employment data and that the report was unlikely to alter expectations for a January Fed pause. “That appears to be the market’s response — after a modest bid, Treasury yields are effectively unchanged in 10s and 30s, while 2s retain a slight residual bid,” he said.
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session_info.http_referrer = data.http_referrer;
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function start_log() {
var session_start_date = new Date();
session_start_time = session_start_date.getTime();
var months = ['Jan','Feb','Mar','Apr','May','Jun','Jul','Aug','Sep','Oct','Nov','Dec'];
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- Monthly headline CPI rises, core undershoots
- Annual pace holds near cycle lows
- Shelter main driver, core services momentum rises
- Supercore climbs, pointing to wage-sensitive risks
By Harry Daniels
LiveSquawk News
@HarryDaniels71
13 January 2026 | 15:30 GMT
Data from the US Bureau of Labor Statistics showed inflation remained broadly stable in December, keeping pressure on the Federal Reserve to continue its rate-cutting cycle into the first quarter.
Monthly headline CPI rose 0.3% in December, a tenth faster than forecast and above November’s 0.2% increase. The unrounded print was 0.31%. Core CPI, which excludes food and energy, rose an in-line 0.2%, undershooting the 0.3% consensus. The unrounded core reading was 0.239% m/m.
The BLS said shelter was the largest positive contributor, rising 0.4% m/m, while food prices climbed 0.7% and energy costs grew 0.3%.
On an annual basis, headline inflation held at 2.7%, matching estimates and was unchanged from November. Core prices rose 2.6% y/y, a tenth softer than forecast but in line with the prior month, marking it the slowest annual core rate since 2021.
Looking at the monthly core breakdown, statisticians said upward pressure came from recreation, airline fares, medical care, apparel, personal care, and education. These gains were partly offset by declines in communication, used cars and trucks, and household furnishings and operations.
Analysts highlighted December’s 0.294% rise in core services inflation, the fastest pace since August, while core goods prices fell 0.002%, the weakest reading since May.
Kathy Bostjancic, chief economist at Nationwide, said the report supported her view that the impact of tariffs on goods prices will fade in 2026. On services inflation, she added: “We continue to look for further disinflation in services inflation in 2026.”
Core CPI services excluding Owners’ Equivalent Rent (OER) — often referred to as the “supercore” measure — rose 0.288% in December, accelerating from a 0.070% increase in November. The metric is closely watched by economists as it is considered most sensitive to labour costs and wage growth.
Nationwide reiterated its view that inflation will peak in the first half of 2026 before trending lower in the second half of the year. The firm said this outlook, alongside expectations of a more dovish Fed chair following the end of Fed Chair Jerome Powell’s term in May, would pave the way for a further 50 basis points of rate cuts starting in June.
Since the turn of the year, investors have also heard from several Fed officials on the inflation outlook.
Most recently, John Williams, president of the Federal Reserve Bank of New York, said policy was “well-positioned” to help return inflation to the Fed’s 2% target while stabilising the labour market.
Meanwhile, Minneapolis Fed President Neel Kashkari said services inflation and labour-market slack remain the key swing factors for future policy decisions, adding that his best guess was that policy was “pretty close to neutral right now.”
BMO Capital Markets’ Ian Lyngen said inflation had taken a backseat to employment data and that the report was unlikely to alter expectations for a January Fed pause. “That appears to be the market’s response — after a modest bid, Treasury yields are effectively unchanged in 10s and 30s, while 2s retain a slight residual bid,” he said.