U.S. inflation ended 2025 on a stable but sticky note, according to fresh data released Tuesday by the U.S. Bureau of Labor Statistics.
The Consumer Price Index (CPI) rose 0.3% month over month in December, while headline inflation held at 2.7% year over year, unchanged from November. The figures underline a cooling inflation trend overall, but with persistent pressure coming from housing, food, and services.
Headline CPI: Stability Masks Internal Pressures
The December increase was largely driven by shelter costs, which climbed 0.4% on the month and remained the single biggest contributor to overall inflation. Over the past year, shelter prices are up 3.2%, continuing to lag broader disinflation trends.
Core CPI, which excludes food and energy, rose 0.2% in December and 2.6% over the past 12 months, signaling that underlying inflation pressures remain contained but not fully resolved.
Food Prices Accelerate, Especially Dining Out
Food inflation picked up noticeably at year-end:
- Food overall: +0.7% in December, +3.1% YoY
- Food at home: +0.7% MoM, +2.4% YoY
- Food away from home: +0.7% MoM, +4.1% YoY
Within groceries, most categories rose, led by “other food at home” (+1.6%). One major exception was eggs, which plunged 8.2% in December, offering rare short-term relief.
Restaurant prices remain a key pain point, with full-service meals up 4.9% over the past year, reinforcing why consumers continue to feel inflation more acutely than headline figures suggest.
Energy: Monthly Uptick, Mixed Annual Picture
Energy prices increased 0.3% in December, but the annual picture remains uneven:
- Energy overall: +2.3% YoY
- Electricity: +6.7% YoY
- Natural gas: +10.8% YoY
- Gasoline: −3.4% YoY
While gasoline prices fell again in December, utility costs, especially natural gas, continue to add upward pressure to household expenses.
Services Inflation Remains the Core Challenge
Several service categories posted notable monthly increases:
- Recreation: +1.2% (largest monthly jump on record)
- Airline fares: +5.2%
- Medical care services: +0.4%
- Lodging away from home: +2.9%
At the same time, disinflation continued in goods-heavy categories such as used cars (−1.1%), communication (−1.9%), and household furnishings (−0.5%), reinforcing the idea that inflation is now primarily a services-driven issue.
Big Picture: Inflation Cooling, But Not Done
On a not seasonally adjusted basis, CPI stands at 324.054, up 2.7% year over year, while the chained CPI rose 2.5%, suggesting slightly lower inflation when accounting for consumer substitution.
The data point to an economy where inflation is no longer accelerating, but also not falling fast enough to declare victory. Housing, dining, utilities, and service-sector wages remain key variables for policymakers.
The next CPI report, covering January 2026, will be released on February 11, and is expected to play a critical role in shaping expectations for Federal Reserve policy in the first half of the year.
