U.S. consumer inflation held at 2.7% as Fed readies January meeting

Consumer prices were 2.7 percent higher in December from a year earlier, and core inflation excluding food and energy was 2.6 percent, the Bureau of Labor Statistics reported, leaving inflation essentially steady as the Federal Reserve prepares to meet later this month. Month to month, the CPI rose 0.3 percent and core prices 0.2 percent.

Grocery prices jumped 0.7 percent for the month and were up 2.4 percent year over year, the largest one-month grocery gain since 2022. Used car prices fell 1.1 percent over the month and have risen only 1.6 percent over the past year, while airline fares unexpectedly climbed 5.2 percent.

Energy overall was up 2.3 percent year over year, though gasoline was down 3.4 percent and electricity rose 6.7 percent. The report also noted that the effects of last year’s tariff increases have largely passed through to sticker prices and that some month-to-month and shelter measures remain distorted by a fall government shutdown that disrupted data collection.

The report is the last major inflation release before the Fed meets on Jan. 27–28. With the December jobs data showing unemployment at 4.4 percent, officials are widely expected to hold interest rates steady after three cuts since September; markets have nudged back expectations for the next cut to July.

Key Topics

Business, Consumer Price Index, Federal Reserve, Tariffs, Grocery Prices, Jerome Powell