U.S. inflation closed 2025 at 2.7%, above Federal Reserve target
December price increases moderated to 0.3%, with core inflation at 2.6% annually. Fed expected to hold interest rates steady.
January 13, 2026
U.S. inflation ended 2025 at 2.7%, according to data released Tuesday by the Labor Department's Bureau of Labor Statistics. The figure exceeds the 2% target set by the Federal Reserve but reflects a gradual moderation following years of double-digit price growth.
Consumer prices rose 0.3% in December, a more moderate increase than anticipated. This monthly gain matched the rate recorded in November. The annual inflation rate of 2.7% equaled November's result, compared with 2.9% for the full year 2024.
Core inflation, which excludes volatile items such as food and energy, rose 2.6% annually. This core measure came in lower than analysts had projected, according to market expectations.
The December data reflected the unwinding of distortions related to a 43-day government shutdown that had artificially suppressed the November index. The shutdown prevented price collection for October, requiring the Bureau of Labor Statistics to use an imputation method to estimate data, particularly for rental costs, when compiling the November report. Although prices were collected in November, this occurred only in the second half of the month when retailers were offering seasonal discounts.
Bret Kenwell, markets analyst at eToro in the United States, noted that the updated U.S. Consumer Price Index "moves away from fears of sustained inflation increases." He added, "After a rebound in mid-2025, we are beginning to see inflation decline."
Food inflation registered its highest level since August and the second-highest in the past 12 months, according to the data.
The inflation figures align with market expectations and confirm analyst forecasts regarding Federal Reserve policy. According to CME Group's FedWatch tool, 95% of surveyed analysts expect the Fed to maintain interest rates in the current range of 3.5% to 3.75% at its late-January meeting. Only 5% of analysts anticipate the central bank will lower rates to 3.25% to 3.5%.