Inflation cooled slightly in December though remains above Feds target

Published: Tuesday, January 13, 2026 at 1:49 pm

Inflation Cools Slightly in December, But Remains a Concern

Washington, D.C. – Inflation showed a slight easing in December, according to the latest data released by the Labor Department. Consumer prices rose 0.3% last month, matching the increase seen in November. Core prices, excluding volatile food and energy costs, also rose 0.2%, consistent with the previous month.

Economists had anticipated a 2.6% increase in consumer prices compared to a year earlier, a slight decrease from November's 2.7%. However, monthly price increases are still exceeding the Federal Reserve's 2% inflation target.

The data collection process was impacted by the government shutdown last fall, which suspended the gathering of price data. Some economists suggest this may have influenced the December figures, potentially showing a larger jump in inflation as data collection returns to normal.

While inflation has decreased from its peak of 9.1% in June 2022, it has remained stubbornly close to 3% since late 2023. The cost of essential goods like groceries, rent, and clothing remains significantly higher than pre-pandemic levels, contributing to affordability concerns.

The Federal Reserve is navigating the challenge of balancing its inflation-fighting efforts with supporting employment. The Fed reduced its key rate in December, but Chair Jerome Powell has indicated a cautious approach to further cuts, pending economic developments. The Fed's interest-rate setting committee is divided on the need for further rate adjustments.

Adding to the complexities, the Department of Justice has issued subpoenas to the central bank related to Powell's congressional testimony regarding building renovations. This has raised concerns about potential political interference in the Fed's operations.

BNN's Perspective: The slight cooling of inflation is a welcome sign, but the persistent high cost of living continues to strain households. The Fed's delicate balancing act between controlling inflation and supporting economic growth is crucial. The political scrutiny surrounding the Fed's actions underscores the importance of its independence in making data-driven decisions.

Keywords: Inflation, Consumer Prices, Federal Reserve, Interest Rates, Economy, Prices, Groceries, Rent, Employment, Jerome Powell

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