U.S. Consumer Price Inflation Increases by 2.7% YoY

U.S. Consumer Price Inflation Increases by 2.7% YoY

U.S. Consumer Price Index (CPI) rose by 0.3% month on month (MoM) in December, according to the Bureau of Labor Statistics (BLS), matching the increases seen in June and September.

The annual headline inflation rate held steady at 2.7%, the same rate as of November, indicating stable but persistent price pressures to close out the year.

Shelter was the largest monthly contributor, up 0.4%, while food indexes surged 0.7% and energy rose 0.3%. Core CPI, excluding food and energy, increased 0.2% MoM, bringing the annual core rate to 2.6%.

Notable monthly increases included recreation (+1.2%, the largest monthly increase ever for the index), airline fares (+5.2%), medical care (+0.4%), apparel (+0.6%), personal care (+0.4%), and education (+0.2%).

The monthly increase was largely offset by declines in communication (-1.9%), used cars and trucks (-1.1%), and household furnishings and operations (-0.5%).

The energy index increased 0.3% MoM, bringing the annual rate to 2.3%. The monthly increase was driven by natural gas (+4.4%), which was offset by gasoline (-0.5%) and electricity (-0.1%).

The energy index increased 0.3% MoM, bringing the annual rate to 2.3%.

The monthly increase was driven by natural gas (+4.4%), which was offset by gasoline (-0.5%) and electricity (-0.1%). Food index rose 0.7% MoM, bringing the annual rate to 4.1%.

Food at home rose 0.7% MoM while other food at home rose 1.6%. Cereals and bakery products (+0.6%), fruits and vegetables (+0.5%), non-alcoholic beverages (+0.4%) and dairy (+0.9%) increased in the month.

On the flip side, meats, poultry, fish, and eggs fell 0.2% and index for eggs declined -8.2%. Food away from home climbed 0.7%, with full service meals rising by 0.8% and limited service meals increasing by 0.6%.

According to the CME Fedwatch tool as of 14th January 2026, 96.1% of market participants now expect the Fed to keep its benchmark rate unchanged at the January meeting.

Overall, we believe that tariff pass-through effect on price remains a key cautionary factor for the Fed. # U.S. Consumer Price Inflation Rises 2.7% YoY.#

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