CPI inflation report December 2026:
Core consumer prices in the US rose less than expected in December, raising hopes that inflation is slowing as the Fed considers its next move on interest rates.
Excluding volatile food and energy prices, the consumer price index rose 0.2% on a seasonally adjusted monthly basis and 2.6% annually, the Bureau of Labor Statistics reported Tuesday. Both were 0.1 points below expectations. Although they look at both measures, Fed officials think core inflation is a better indicator of where inflation is headed over the long term.
On a headline basis, CPI reported a 0.3% increase for the month and the annual rate for all items was 2.7%. Both were exactly in line with Dow Jones’ consensus estimate.
The Fed targets annual inflation at 2%, so the report provides some evidence that the pace of price increases is returning to target but remains high.
Following the report, stock market futures rose while Treasury yields fell.
Shelter, a key element of stickiness, rose 0.4% and was the biggest item of the monthly increase, according to the BLS. The category accounts for more than a third of the CPI weight and increased by 3.2% year-on-year.
Other parts of the report also showed continued inflation.
Food prices increased by 0.7% during the month; This was accompanied by increases in entertainment, airline tickets, and medical care. Increases were also noted in some tariff-sensitive categories, including clothing. However, household goods saw a decline as President Donald Trump backed down from his threat to increase tariffs on imports in this sector.
The 1.2% increase in recreation was the largest monthly gain ever for the index in data dating back to 1993, the BLS said.
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