U.S. Inflation Stays at 2.7% in December 2025

• United States (U.S.) inflation stayed at 2.7% in December, according to data that suggested price growth is being contained even as it remains above the Federal Reserve’s (Fed) target.
• The annual consumer price index (CPI) figure was unchanged from November and in line with the expectations of economists polled by Bloomberg. Core inflation, stripping out volatile food and energy prices, was 2.6%, just below expectations of 2.7%. Meanwhile, housing-related prices rose 3.2%, pushing up the headline figure.
• The release from the Bureau of Labour Statistics indicated price rises in the world’s leading economy had eased, despite concerns last year that Donald Trump’s aggressive deployment of tariffs could fuel a lasting inflationary surge. “The key takeaway is that goods prices were very benign, which underscores the point that tariffs have had a far more muted impact on inflation than feared,” said James Knightley, chief international economist at ING.
• Still, economists remained wary of the data after a sharp drop in the previous month’s release drew criticism that it had been distorted by a halt to data collection during last year’s record government shutdown. “Although these values suggest a softening in inflation, we are cautious not to extrapolate too much from this volatile report,” said Michael Hanson, a senior economist at JPMorgan.
• The two-year Treasury yield, which is highly sensitive to interest rate expectations, dropped 0.03 percentage points to 3.52% following Tuesday’s inflation report. Two interest rate cuts in 2026 are currently priced in by traders in the futures market. The US dollar index fell after the release, while stock market futures rose.

(Source: Financial Times)