US Core CPI Rises 0.2%, Bucking Estimates For Bigger Rebound

Underlying US inflation rose in December by less than expected, a more confident signal of cooling price growth after shutdown-related distortions complicated the previous report.

The core consumer price index, excluding the often volatile food and energy categories, increased 0.2% from November, according to Bureau of Labor Statistics data out Tuesday. On an annual basis, it advanced 2.6%, matching a four-year low.

The reading is perhaps a more convincing sign that inflation is on a downward path, since a number of caveats in November’s report contributed to a significant pullback in the annual core CPI.

Economists said that data was artificially depressed by the record-long government shutdown because the BLS couldn’t collect prices in October and assumed no increases in key housing metrics. November data were also collected later than usual and could have been affected by holiday discounts.

There was some bounce-back in shelter costs, which were the “largest factor” in the overall monthly advance, BLS said, while apparel prices also climbed. Several categories showed price declines, including appliances and used cars and trucks. Vehicle repair costs fell by the most on record.

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 labor market. 

Stock futures jumped while Treasury yields fell after the report.