WASHINGTON–Inflation increased 2.7% in December, a figure that is similar to that seen in November 2025 and in line with what many analysts had been predicting.
The Consumer Price Index released by the Labor Department shows that when volatile food and energy costs are removed, the core measure of consumer prices increased 2.6% over the year, a figure also similar to that reported in November.
Prices rose a seasonally adjusted 0.3%, while core prices rose 0.2% over the month in December.
The biggest increases were seen in areas that incuded groceries and restaurant meals, with the 0.7% jump in food prices from a month earlier the largest one-month increase in grocery prices since October 2022. Housing costs, transportation services and medical care also accelerated in December, according to the Labor Department.
Gasoline costs and prices for new and used vehicles also declined.
CU Economist Responds
“Inflation remained steady in December with year-over-year headline and core prices unchanged from November,” said Dawit Kebede, senior economist with America’s Credit Unions. “Commodity prices were flat, suggesting only mild tariff pass-through to consumers. Core services excluding shelter came in tame, indicating moderation in service prices. While inflation remains above the Federal Reserve’s 2% target, a softening labor market is expected to exert downward pressure on prices, with further moderation through 2026. Stabilizing inflation and improved outlook for 2026 is encouraging news for credit union members, even as grocery and housing costs remain elevated.”
Trump Demands Rate Reductions
President Trump, in a social media post, called on the Fed to reduce rates.
“JUST OUT: Great (LOW!) Inflation numbers for the USA. That means that Jerome ‘Too Late’ Powell should cut interest rates, MEANINGFULLY!!!” the president wrote. “If he doesn’t he will just continue to be, “TOO LATE!” ALSO OUT, GREAT GROWTH NUMBERS. Thank you MISTER TARIFF! President DJT.”
The Fed, however, has been proceeding carefully even as it has reduced rates in recent meetings, as it seeks to balance inflation and employment.
The president’s post and statement related to Fed Chairman Jerome Powell come at the same time the Department of Justice has announced it served grand jury subpoenas on the Federal Reserve and has threatened a possible criminal indictment tied to Powell’s testimony before the Senate Banking Committee in June of 2025 over a multiyear renovation of the Federal Reserve’s headquarters in Washington that has gone well over budget. No charges have been filed.
Strong Pushback
The investigation has been met by strong pushback, including from Powell himself, who released a video in which he said he has “deep respect for the rule of law,” but called the legal action “unprecedented” and a “pretext” aimed at pressuring monetary policy decisions, particularly over interest rates.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said.
Among those who issued statements critical of the DoJ investigation was former NCUA Chairman Todd Harper, who is currently engaged in litigation to be returned to his job after being fired by Trump in April of 2025.
