Key Takeaways

  • Inflation likely rose in December, with tariffs expected to put upward pressure on goods prices during the first half of 2026.
  • Analysts say distortions in the data from the government shutdown persist, as it did in in November when goods and rental prices appeared low.
  • Bond futures markets predict no change to interest rates, given data concerns and December’s modest jobs report.

Forecasts for December’s Consumer Price Index report indicate inflation ticking higher, driven mainly by rising goods prices. After a surprisingly cool report in November, economists expect that prices rose faster in December, reflecting ongoing tariff pressures which are expected to subside in the second half of 2026.

“We are going to see inflation continue to move slightly higher in early 2026, but we’re not going to see a surge,” says Gregory Daco, chief US economist at EY-Parthenon.

Overall, analysts predict that headline inflation rose 0.3% on a month-over-month basis in December and 2.7% year over year, according to FactSet’s consensus estimates. Expectations hold that core inflation, which excludes volatile food and energy prices, rose 0.26% month over month and 2.7% year over year in December. These estimates are higher than November readings, which showed falling energy prices that pulled monthly inflation down to 0.2%.

Note: The BLS did not release official month-over-month changes data for November 2025, owing to the missing October data that resulted from the government shutdown. Economists created a rough picture of the monthly changes for November by comparing the underlying price index levels against those in September. Here’s how to navigate the November report.

Analysts warn that data distortions linger from the government shutdown, continuing to artificially lower goods and rental prices and skewing December’s data. This leads Bernard Yaros, lead US economist at Oxford Economics, to forecast headline inflation above consensus estimates at 0.4% month over month. Still, he advises caution: “It’s not going to be until midyear that we start to really get a cleaner read.”

December CPI Report Highlights

  • CPI report release date and time: Tuesday, Jan. 13 at 8:30 a.m. EST.
  • The CPI is forecast to rise 0.3% in December after rising 0.2% from September through November.
  • Core CPI is forecast to rise 0.31% in December after rising 0.2% from September through November.
  • The CPI year over year is forecast to rise 2.7% in December after increasing 2.7% from September through November.
  • Core CPI year over year is forecast to rise 2.7% in December after increasing 2.6% from September through November.

Tariffs Are Still Likely Pushing Goods Prices Higher — for Now

Tariffs will likely have created inflationary pressure for goods prices in December, particularly for food, apparel, and vehicles, according to EY-Parthenon’s Daco. He says grocery prices face a “notable” upward push despite the removal of some food tariffs at the end of last year.

Oxford Economics’ Yaros agrees that tariff-related pressures could subside as costs finish passing through to consumers, but he thinks that unknowns remain. “Very soon, we should be on the other side of this,” he says, “assuming that there are no further changes to trade policy—which is a big if.”

Government Shutdown Still Distorts Goods and Rental Data

Because the government did not reopen until mid-November, data collection likely understated goods prices for that month, as retailers usually roll out holiday discounts during that period. Yaros argues this low baseline leads to an upward bias on the December CPI. “For core goods, we should expect to see a bit of a pop next in December just because of how artificially low they were in November,” he says.

Shutdown-related disruptions also affected data collection for shelter pricing, as the Bureau of Labor Statistics assumed no change in the rental prices of last October. Yaros says that assumption kept rent prices artificially low, paving the way for higher inflation readings in the following months. The data should self-correct in April, when the BLS updates its six-month rental price estimate. Until then, Yaros says analysts are navigating unusually distorted data: “None of this is normal.”

Fed Expected to Hold Rates Steady

Following three interest rate cuts in 2025, the Fed is seen poised to start the new year by maintaining its benchmark rate at its current range of 3.50%-3.75%. That’s thanks partly to December’s jobs report, which showed slower-than-expected hiring and a slight improvement in the unemployment rate.

Roughly 95% of futures market participants expect no change in rates at the Fed’s January meeting, according to the CME FedWatch tool. The remaining sliver foresee a quarter-point cut.

Correction: An earlier version of this article did not clarify that November CPI data showed changes from September rather than month over month.