TLDR
- US core inflation is forecast to rise 2.7% in December, up from 2.6% in November.
- The November CPI was skewed by data issues linked to a government shutdown.
- Monthly inflation is projected at 0.3% for both core and overall prices.
- Retail sales are forecast to rise 0.4% in November, excluding auto dealers.
US consumers likely saw only a slight increase in inflation as 2025 ended, with core inflation forecasted to rise 2.7% in December. This marks a minor uptick from November’s 2.6% increase, the slowest yearly gain since early 2021. The upcoming data is expected to reflect adjustments from earlier distortions tied to a prolonged government shutdown, while Federal Reserve officials watch inflation trends closely.
Year-End Inflation Expected to Slightly Increase
Core inflation in the United States is forecast to rise 2.7% in December 2025 from the same month in 2024. This follows a 2.6% annual increase in November, which was the lowest since early 2021. The core Consumer Price Index (CPI) excludes food and energy costs and is widely monitored as a gauge of underlying inflation.
Economists also expect monthly gains of 0.3% in both overall and core CPI readings. This would signal a moderate rise in prices, although not seen as a sharp reversal of the cooling trend observed throughout 2025.
Shutdown Disruptions Affected Earlier CPI Reports
The Bureau of Labor Statistics was unable to release month-over-month figures in the previous CPI report due to a prolonged government shutdown. That disruption affected the collection of price data in October, leading to distorted figures in November.
According to analysts, the November report showed a broader-than-expected cooling of inflation. Rent indexes were assumed unchanged due to missing data, which likely pulled down the headline figure. “We think the December print will be hot, but mostly because of an unwinding of some of the downward bias in November’s print,” Bloomberg Economics stated.
Fed Expected to Hold Rates Amid Unclear Inflation Signals
With inflation readings affected by data inconsistencies, Federal Reserve officials are expected to keep interest rates unchanged for now. Signs of stabilization in the labor market, including slowing wage growth and weaker job reports, support the current policy stance.
John Williams, President of the Federal Reserve Bank of New York, will open a week filled with public remarks from central bank officials. Others scheduled to speak include Michelle Bowman, Alberto Musalem, Philip Jefferson, and Anna Paulson. These events come at a critical time as policymakers assess the trajectory of inflation and growth.
Retail Spending and Other Economic Data in Focus
Consumer spending in the final quarter of 2025 has remained steady. Government data due on January 14 is expected to show retail sales, excluding auto purchases, rising by 0.4% in November. This would match the previous month’s gain and suggest consistent demand among US shoppers.
Other economic reports set for release include October new-home sales, the November producer price index, December industrial production, and home resale data. These updates will offer more insight into economic conditions as the Fed and markets await clearer signals on inflation and growth.
Meanwhile, in Canada, officials are preparing to release data on manufacturing, wholesale sales, and foreign investment flows, along with updated sub-provincial population estimates. Travel data is also expected to reflect a continued decline in visits to the US by Canadian residents.
