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- The inflation rate remained at 2.7% in December, matching expectations.
- The report provides greater clarity on price changes, following the absence of an October estimate.
- The Federal Reserve can use the new data to inform its first interest rate decision of the year.
The US ended 2025 with a lower inflation rate, but it was still far above the Federal Reserve's target.
The year-over-year inflation rate was 2.7% in December, the same as the forecast and November's increase, and down from the 2.9% a year ago.
After most October year-over-year figures couldn't be calculated, the new report brings a little more clarity to how quickly prices have changed in the last few months of the year.
Last Friday's jobs report also indicated how the economy has changed in 2025. The US added 584,000 jobs in 2025, a cooldown from job growth over the previous few years. Unemployment remained low in December but was higher than a year ago.
The Federal Reserve will be able to use these economic reports to make its interest rate decision. Economists and traders expect Federal Open Market Committee members, who will meet January 27 and January 28, to hold interest rates steady after three straight cuts before 2025 ended.
CME FedWatch indicated a 95% chance before the CPI report that the Fed would hold interest rates steady.
This is a developing story. Please check back for updates.
