CPI preview: Inflation expected to be muted in December as economic data gets back on track
- - CPI preview: Inflation expected to be muted in December as economic data gets back on track
Myles UdlandJanuary 12, 2026 at 8:26 PM
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The Consumer Price Index (CPI) for December is set for release Tuesday morning, with the data expected to show inflation pressures remained steady in the final month of 2025.
On a headline basis, consumer prices are expected to have risen 0.3% over the prior month and 2.7% from the prior year in December, according to data from Bloomberg. The annual mark would be unchanged from November's cooler-than-expected reading.
"Core" CPI, which excludes the more volatile categories of food and energy, is expected to show prices rose 0.3% over the past month and 2.7% over the past year. The annual number would mark a slight uptick from November.
Inflation has remained stubbornly above the Federal Reserve's 2% target for some time. It has drifted downward over the past year, however, and has been characterized by policymakers as a less acute risk to the economy than a dramatic softening of the labor market.
Tuesday's report comes just a few days after the December jobs report showed the unemployment rate retreated from a four-year high, largely firming up investor bets that the Federal Reserve will keep rates unchanged later this month.
Going into the December CPI report, data from the CME Group showed markets putting 95% odds on the Fed keeping rates unchanged at the conclusion of its Jan. 27-28 meeting.
Read more: How jobs, inflation, and the Fed are all related
US Federal Reserve Chair Jerome Powell speaks at a press conference following a two-day meeting of the Federal Open Market Committee at the US Federal Reserve in Washington, D.C., on Dec. 10, 2025. (Reuters/Kevin Lamarque) (REUTERS / Reuters)
While Tuesday's report will mark the first inflation reading published on its usual cadence after the US government shutdown altered releases for September and November — resulting in the cancellation of October's report — some on Wall Street still expect echoes of that period to show up in the data.
"As a result of the shutdown not allowing for the collection of October data, the BLS used carry-forward imputation to help formulate the November estimates," Bank of America's US economics team, led by Stephen Juneau, wrote in a note on Monday.
The BoA team added: "One area where this was used is in cities that are sampled in even months where they carried-forward August prices into October. We expect this to bias the December measure higher as the data collected in December will be comparing December prices to August instead of October."
As a result, the firm expects headline CPI to rise 0.4% over the prior month, more than Wall Street estimates.
In a client note, Pooja Sriram and Marc Giannoni of Barclays' US economics team also flagged the potential for data collection issues to bias Tuesday's data upward.
As a result, Barclays expects the next "clean" inflation read to come in March, when the BLS releases its report for February 2026.
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Source: “AOL Money”
