US inflation eases in December as core prices show slowdown

US consumer prices rose at a slower pace in December, signalling easing inflation as the US Federal Reserve evaluates its next interest rate decisions.

The core Consumer Price Index (CPI), which excludes volatile food and energy costs, increased 0.2% month-on-month and 2.6% year-on-year, both 0.1 percentage points below market expectations, the Bureau of Labor Statistics reported Tuesday (January 13).

The 2.6% annual rise in core CPI marks the slowest pace of inflation since March 2021. On a headline basis, the all-items CPI rose 0.3% for the month and 2.7% year-on-year, matching both November’s increase and consensus estimates.

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Monthly, headline CPI increased 0.3%, while core CPI grew 0.2%. Economists had anticipated a 0.3% monthly increase and a 2.7% annual rise for both measures.



Most prices in November were collected in the second half of the month, after the government reopened, when holiday discounts kicked in, which may have biased November inflation lower. And since rental prices weren’t fully collected in October, the agency that prepares the inflation reports used placeholder estimates in November, which may have biased prices lower, economists said.

Still, Tuesday’s report suggested that inflation didn’t change even with newer, more comprehensive figures. Consumer prices rose 2.7% in December, compared with a year ago, the same figure as in November, while core prices increased 2.6% from a year earlier, also unchanged.

Inflation has come down significantly from the four-decade peak of 9.1% that it reached in June 2022, but it has been stubbornly close to 3% since late 2023. The cost of necessities such as groceries is about 25% higher than it was before the pandemic, and other necessities such as rent and clothing have also gotten more expensive, fueling dissatisfaction with the economy that both President Donald Trump and former President Joe Biden have sought to address, though with limited success.



US Federal Reserve officials are widely expected to hold interest rates steady later this month after three straight cuts to close out 2025. Officials are divided over how much further to lower rates this year, balancing concerns that tariffs may keep price pressures elevated while also being mindful of softness in the labour market.