CPI Holds Firm as Inflation Remains Sticky

U.S. inflation remained steady at the end of 2025, underscoring persistent price pressures despite cooling from pandemic-era highs. According to CBS News, the Consumer Price Index (CPI) rose 2.7% year over year in December, unchanged from November and broadly in line with expectations.

Core CPI, which excludes food and energy, increased 2.6% annually, slightly below forecasts, offering modest reassurance to policymakers. On a monthly basis, core prices rose 0.2%, suggesting some easing in underlying inflation trends. Still, inflation remains above the Federal Reserves 2% target, keeping monetary policy firmly data-dependent heading into 2026.

Food prices continued to strain household budgets, rising 3.1% year over year in December. Notable increases were seen in ground beef and coffee prices, while egg prices declined sharply. These uneven price movements help explain why many consumers still feel financial pressure despite stable headline inflation.

The Federal Reserve cut interest rates three times in late 2025 to support a cooling labor market, but officials have signaled caution given inflations persistence. Market expectations currently point to the Fed holding rates steady at its January meeting, reflecting confidence that inflation is neither accelerating nor easing fast enough to justify further near-term action.

Overall, Decembers CPI report highlights an economy in transition—resilient but still contending with sticky inflation that will continue to influence policy decisions and market sentiment in 2026.