December CPI Doesn’t Signal January 2026 Rate Cut

Inflation closed out 2025 at 2.7%, down from September’s 3% peak, but likely still too high to persuade Federal Reserve policymakers to cut interest rates at their meeting this month.

Grocery price inflation stood out. Food prices rose 3.1%, with increases across most major categories except eggs, which fell 8.2%.

Inflation has remained above the Fed’s 2% target for more than four and a half years, Megan Leonhardt and Janet H. Cho reported for Barron’s Daily.

Core inflation, which excludes more volatile food and energy costs, held at 2.6%. Seema Shah, chief global strategist at Principal Asset Management, expects inflation to remain slightly elevated this year, while Santander’s Stephen Stanley is bracing for a wave of tariff-related price hikes.

Grocery price inflation stood out. Food prices rose 3.1%, with increases across most major categories except eggs, which fell 8.2%.

The food-at-home index rose 2.4% from a year earlier, while the cost of dining out increased 4.1%. Food prices remain a sore point for consumers, even as the White House argues that overall prices are easing.