The December 2025 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.3% this month, up from the 0.2% average over the last two months. These data were released at 8:30 am EST on January 13, 2026, by the Bureau of Labor Statistics (BLS). Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.7%, matching the recent two-month average.
Today’s core results also missed economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents December’s figures, while the right column represents forecasters’ expectations. As you can see, the red metrics highlight how core inflation was weaker than anticipated.
With Fed Chairman Jerome Powell still leading the FOMC until his term ends later this year, he reiterated in December that he’s in no hurry to cut rates. And with investors pricing in little to no chance of a rate cut in January, Bloomberg reported on Jan. 9 that “Bond traders maintained an outlook for two rate cuts overall in 2026, with the first seen by mid-year.”
As a result, disappointing economic data will likely be required for accelerated easing over the next few months.
Food Prices
The food index rose by 0.7% MoM in December, and five of the six major grocery indices increased this month.
- Cereals and bakery products (+0.6%)
- Meats, poultry, fish, and eggs (-0.2%)
- Dairy and related products (+0.9%)
- Fruits and vegetables (+0.5%)
- Nonalcoholic beverages (+0.4%)
- Other food at home (+1.6%)
The food away from home index also jumped by 0.7%, as restaurant inflation kept pace with grocery prices in December.
Energy Prices
The energy index increased by 0.3% MoM in December, with gasoline prices down by 0.5%, electricity down by 0.1%, and natural gas rising by 4.4%.
Core CPI
The December core CPI rose by 2.6% Y-o-Y, matching the average figure from the previous two months. As a reminder, the October CPI report was cancelled due to the government shutdown, so the metrics don’t have comparable MoM data from November.
- Shelter index: (+0.4%)
- Rent index: (+0.3%)
- Owners’ equivalent rent: (+0.3%)
- Motor vehicle insurance: (NA)
- Medical care services: (+0.4%)
- Physician services: (+0.3%)
- Hospital services: (+1.0%)
- Airline fares: (5.2%)
Seasonally Unadjusted CPI
Before seasonal adjustments, the CPI-U for December 2025 increased by 2.7% Y-o-Y to an index level of 324.054. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Let the Good Times Roll
With solid economic data pointing to steady economic activity, the FOMC can continue its wait-and-see approach and not rush further rate cuts.
For example, the BLS released its Employment Situation report on Jan. 9. The U.S. economy added 50,000 net new jobs, and the unemployment rate declined to 4.4%. Furthermore, average hourly earnings (a proxy for wage inflation) increased from 3.6% Y-o-Y in November to 3.8% Y-o-Y in December. Consequently, the labor market remains on solid footing for the time being.
As further evidence, the BLS released its Job Openings and Labor Turnover Summary (JOLTS) on Jan. 7. And with more than seven million job openings still available, the metric (the blue line below) has stabilized near its pre-pandemic baseline. Likewise, layoffs and discharges (the green line below) also remain in a healthy range and highlight how most employers continue to retain staff.
Finally, the Atlanta Fed updated its Q4 GDPNow model on Jan. 9. And while the results can be skewed by fluctuating imports and exports, and the data is lagged, the latest reading pegs growth at 5.1% (the green line below). If realized, the results would be well above 2% trend growth and economists’ consensus estimates (the blue line below).
Add it all up, and the recent data is strong enough to suppress any rate-cut calls, and the FOMC should continue to preach the same message until weaker data forces its hand.
Turning to the financial markets, gold had a tremendous 2025, and the fundamentals support more strength in 2026.
To explain, the orange line above tracks the 5-year rolling percentage change in the gold price, while the blue line above tracks the 5-year rolling percentage change in global military spending. As you can see, the yellow metal lives up to its safe-haven reputation when the geopolitical outlook becomes more treacherous.
To that point, U.S. President Donald Trump has advocated for a 50% increase in the U.S. military budget, in what he called “very troubled and dangerous times.” As a result, the spending trend should continue, and the developments are bullish for gold.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Please seek the guidance of a financial advisor before making any investment decision.
Furthermore, if you’re looking to diversify your portfolio or strategically exit a business, there are several strategies to help realize the best valuation. Our extensive guides for company owners in Illinois, Michigan, and Ohio provide insights into compliance issues, tax plans, demand assessments, and much more.
In addition, please consult our list of debt management firms for other financial services in your area.
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King’s College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
