Despite a hopeful moment of decline in November, inflation looks to be stagnant in December, remaining paused from hitting the Federal Reserve’s 2% goal, according to the latest Bureau of Labor Statistics data.

The Consumer Price Index (CPI) for December saw a slight increase of 0.3% for the all items index, landing at 2.7% annual inflation. This is the same reading as seen in November. The 0.3% monthly rise was attributed largely to the shelter index, which rose 0.4% monthly and landed at 3.2% annual inflation. In addition, the food index increased 0.7%—as did the food at home index and the food away from home index—while the index for energy rose 0.3%.

The all items index less food and energy—also known as core inflation—rose 0.2% in December, landing at 2.6% annual inflation. As with the all items index, this is the same reading as seen in November and once again the lowest annual reading since March 2021.

Despite no definitive downward movement in inflation, experts say that December’s CPI “met expectations.”
“The December print marks a slight moderation in price increases as 2025 came to a close,” said Realtor.com® Senior Economist Jake Krimmel. “Importantly, there was no rebound from November’s downside surprise report, whose data collection was impacted by the government shutdown.”
 
Krimmel added that for the Fed, “this was a largely ho-hum report” and “won’t alter the policy outlook heading into the January meetings or beyond.”

“Still, if CPI and the Fed’s preferred PCE measure continue to moderate toward the low-2% range, that would meaningfully ease pressure on the inflation side of the dual mandate and allow policymakers to focus more squarely on the labor market,” he continued. “Job market softening remains a concern, but recent data suggest conditions are not further deteriorating. Powell’s Fed will remain data dependent and is poised to keep their wait-and-see approach heading into 2026.”

The Fed faces other challenges ahead beyond inflation, with the issue of Fed independence currently on the minds of many after an investigation was announced against Chair Jerome Powell over renovations to the central bank’s headquarters. 

“Any erosion of Fed independence, or the perception that the Fed is no longer data-dependent, risks pushing long-term interest rates higher by lifting inflation expectations and risk premia,” commented Krimmel. “That dynamic works against lower mortgage rates, even in a cooling inflation environment.”

Krimmel concluded by saying that despite what can be considered a positive CPI report, “meaningfully improving affordability and homebuyer activity requires data-driven, trustworthy monetary policy to deliver a sustained period of stability for households and markets.”

• 
• 
• 
•