Annual inflation remains 2.7% in December, final 2025 report reveals

Core Insights - U.S. consumer prices increased by 2.7% in December year-over-year, aligning with forecasts, marking a year of gradually easing but uneven inflation across the economy [1] - The December Consumer Price Index (CPI) report indicates a 0.3% rise in consumer prices from November to December, driven primarily by shelter and food costs [2] Inflation Trends - Core inflation, which excludes food and energy prices, remained stable at 2.6% in December, consistent with the previous month [3] - Consumers expect near-term inflation to rise to 3.4%, reflecting concerns about financial conditions across different income groups [4] Federal Reserve Implications - The December CPI report will influence the Federal Reserve's interest rate decision at the end of January, with inflation still above the Fed's 2% target [5] - A decline in the unemployment rate from November to December has reduced expectations for another cut to the Fed's benchmark interest rate, with forecasts suggesting the rate will remain between 3.5% and 3.75% [6]