Key TakeawaysInflation 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\u2019s modest jobs report.<\/p>\n
Forecasts for December\u2019s Consumer Price Index report indicate inflation ticking higher, driven mainly by rising goods prices. After a surprisingly cool<\/a> 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.<\/p>\n \u201cWe are going to see inflation continue to move slightly higher in early 2026, but we\u2019re not going to see a surge,\u201d says Gregory Daco, chief US economist at EY-Parthenon.<\/p>\n 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\u2019s 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<\/a>, which showed falling energy prices that pulled monthly inflation down to 0.2%.<\/p>\n 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\u2019s how to navigate the November report.<\/a><\/p>\n Analysts warn that data distortions linger from the government shutdown, continuing to artificially lower goods and rental prices and skewing December\u2019s 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: \u201cIt\u2019s not going to be until midyear that we start to really get a cleaner read.\u201d<\/p>\n December CPI Report HighlightsCPI 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 \u2014 for Now<\/p>\n Tariffs will likely have created inflationary pressure for goods prices in December, particularly for food, apparel, and vehicles, according to EY-Parthenon\u2019s Daco. He says grocery prices face a \u201cnotable\u201d upward push despite the removal of some food tariffs at the end of last year.<\/p>\n Oxford Economics\u2019 Yaros agrees that tariff-related pressures could subside as costs finish passing through to consumers, but he thinks that unknowns remain. \u201cVery soon, we should be on the other side of this,\u201d he says, \u201cassuming that there are no further changes to trade policy\u2014which is a big if.\u201d<\/p>\n Government Shutdown Still Distorts Goods and Rental Data<\/p>\n 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. \u201cFor 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,\u201d he says.<\/p>\n 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: \u201cNone of this is normal.\u201d<\/p>\n Fed Expected to Hold Rates Steady<\/p>\n