Inflation likely edged up in December, closing out a year of stubbornly high prices complicated by tariffs and a government shutdown.
New government figures this morning are expected to show that prices rose by 0.4 percent between November and December, up from September’s reading of 0.3 percent. Overall, prices are expected to be about 2.7 percent higher than they were a year ago.
“There’s a lot of noise in the data but we’re ending the year close to where we began it,” said Pooja Sriram, U.S. economist at Barclays Investment Bank. “Inflation hasn’t materially accelerated. But it also isn’t showing any convincing signs of deceleration.”
The December report offers the clearest view of inflation in months, after a period of government shutdown-related disruptions. There was no official consumer price index report in October because of the federal work stoppage, and the November report — which showed unexpected cooling — was heavily skewed by delays in data collection and other shutdown-related quirks.
Economists expect some of those distortions to continue through the spring, because of how rent inflation figures were calculated during the shutdown. There were also other issues: The data for November, for example, was collected in the last two weeks of the month, when many retailers had already begun offering deep discounts for the holidays. By comparison, prices for December could appear artificially higher, even after seasonal adjustments.
The Federal Reserve has been trying to get inflation back to its goal of 2 percent without toppling the economy. Although new tariffs haven’t led to the large price increases many economists had feared, the inflation rate has proven tough to bring down, remaining between 2.3 and 3 percent for all of 2025.
“The Fed is in a particularly difficult position, trying to assess how much of the tariff costs have been passed through and how much have yet to show up,” said Bernard Yaros, lead U.S. economist at Oxford Economics.
Fed officials lowered interest rates three times last year, including in December, but have signaled caution about additional cuts because of persistent inflation. That’s rankled President Donald Trump, who has been pressuring the Fed to bring down borrowing costs more aggressively. This weekend, the Justice Department opened a criminal inquiryinto Fed Chair Jerome H. Powell.
On Sunday, Powell accused the administration of threatening prosecution to pressure the central bank to lower interest rates.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” he said in a statement.
The post-pandemic surge in prices has become a key political issue, helping clinch the presidency for Trump. But a year into its second term, it’s proving to be a sticking point as Trump struggles to convince Americans that things are becoming more affordable.
Economists are divided on where inflation is headed in 2026. Some say it’s poised to cool, as easing rent costs show up in official inflation measures. Others, though, argue that the brunt of the price increases from Trump’s trade and immigration policies have yet to materialize. The divisions are clear among Fed policymakers, too, who were deeply divided about the need for rate cuts this year.
Andrew Ackerman contributed to this report
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