Consumer Prices Were Up to 2.6% in December, Core Prices to 2.7%/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Inflation cooled slightly in December, with prices rising 0.3% month-over-month. Despite easing from pandemic-era highs, inflation remains above the Federal Reserve’s 2% target. Essentials like groceries and rent continue to strain household budgets, keeping affordability a top political issue.
Quick Look
- Consumer prices rose 0.3% in December, matching November’s gain.
- Core inflation (excluding food and energy) rose 0.2%.
- Inflation remains above the Fed’s 2% target, despite easing trends.
- Year-over-year inflation was 2.6%, slightly down from 2.7% in November.
- A prior government shutdown delayed data collection and may affect accuracy.
- Essentials like groceries, rent, and healthcare remain significantly higher.
- Fed unlikely to cut interest rates aggressively while inflation persists.
- Trump criticizes the Fed’s pace on rate cuts amid economic unease.
- DOJ subpoenas Powell over Fed renovation testimony, raising concerns over political pressure.
Consumer Prices Were Up to 2.6% in December, Core Prices to 2.7%
Deep Look
WASHINGTON (AP) — Inflation cooled modestly in December, offering a sign that the steep price increases of the past two years are continuing to ease — though not yet fast enough to meet the Federal Reserve’s target.
According to data released Tuesday by the U.S. Labor Department, consumer prices rose 0.3% from November to December, the same monthly increase as the previous month. Excluding the often-volatile food and energy sectors, core inflation — a key measure closely tracked by the Fed — rose 0.2% in December, also unchanged from November.
On a year-over-year basis, consumer prices in December were up 2.6%, slightly lower than November’s 2.7% annual rate. Core prices were up 2.7% annually — a slight uptick from 2.6% in November.
Inflation Still Feels High for Many Americans
Despite the easing pace, prices for essential goods — including groceries, rent, electricity, and healthcare — remain significantly higher than before the COVID-19 pandemic. The cost of groceries is roughly 25% higher than it was in early 2020, and housing remains unaffordable for many. These persistent affordability challenges have created deep economic anxiety across the country and continue to weigh heavily on public opinion.
Both President Donald Trump and former President Joe Biden have attempted to address these concerns on the campaign trail, but with limited success in shifting public sentiment.
Shutdown Delayed Data, Affecting Accuracy
This month’s inflation figures come with an unusual caveat: a six-week federal government shutdown last fall interrupted the data collection process. Some economists believe this may have skewed November’s results downward and could make December’s numbers less reliable.
In November, annual inflation dropped sharply from 3.0% in September to 2.7%, but much of that was attributed to quirks in timing, holiday discounts, and missing rental data. The December data reflects a more complete picture but is still being viewed with some caution.
Fed Remains in Wait-and-See Mode
The Federal Reserve, which targets a 2% inflation rate, is unlikely to rush into further rate cuts despite growing pressure from the Trump administration.
Last month, the Fed cut its benchmark interest rate by a quarter point, bringing it to around 3.6%, but Fed Chair Jerome Powell has signaled the central bank would hold steady to monitor how inflation trends evolve.
The Fed’s 19-member rate-setting committee remains sharply divided, with some officials wary of easing too soon and potentially reigniting inflation. Powell emphasized the need to base decisions on economic data, not politics.
Political Pressure Mounts
Meanwhile, President Trump has intensified his attacks on the Federal Reserve, criticizing it for not cutting rates more aggressively. He argues that lower interest rates would ease pressure on mortgage holders and reduce government borrowing costs. However, the Fed does not directly control mortgage rates, which are driven by broader market conditions.
Adding to tensions, the Justice Department recently served subpoenas to the Fed, targeting Powell’s congressional testimony about a $2.5 billion renovation of two Federal Reserve buildings. Trump administration officials have alleged misrepresentation and potential misconduct — charges Powell has strongly denied.
In a statement Sunday, Powell said the threats of criminal charges were “pretexts” aimed at undermining the Fed’s independence.
“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,” Powell said.
The investigation has raised alarms among economists and former Fed officials, who fear that increasing political interference could undermine the central bank’s credibility and its ability to manage inflation effectively.
Looking Ahead
With inflation still hovering above target and political pressure intensifying, the path forward for U.S. monetary policy remains uncertain.
Consumers, meanwhile, continue to feel the squeeze from higher costs, despite the positive trendlines in inflation data. Whether those improvements will be enough to shift economic sentiment — or political fortunes — remains to be seen.
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