Inflation holds steady in December as White House ramps affordability push
Add Axios as your preferred source to
see more of our stories on Google.
Inflation held at a four-year low in December, the government said on Tuesday.
Why it matters: The data comes as the White House attempts to address consumers' affordability concerns that have weighed on President Trump's approval rating.
By the numbers: The Consumer Price Index rose 2.7% in the 12 months ending in December, while core CPI — which strips out food and energy costs — rose 2.6%.
- On a monthly basis, CPI rose 0.3%, while core CPI rose 0.2%. Both measures rose 0.2% in the two months from September to November.
The intrigue: The Bureau of Labor Statistics did not release the October CPI report due to the government shutdown.
- Economists, including Fed officials, have noted that November's government-delayed inflation report might have understated inflation.
- The issue stems from the BLS "zeroing out" shelter price changes for the month of October, when the shutdown prevented the agency from collecting data.
The big picture: Tuesday's report is the second inflation read since the Federal Reserve cut interest rates for the third time last year, a decision that caused a split among officials.
- Some Fed officials — including two who dissented against the December rate cut — remain worried about inflation. While it has eased from its peak, inflation has been above the Fed's 2% target since 2021.
- President Trump's tariffs presented a fresh inflationary threat, though the Fed has said the wide ranging levies could be a one-time price hike.
Zoom in: There were signs of some faster price hikes for key categories last month, at least relative to September — the last time the government was able to collect granular item-by-item price data.
- Grocery prices, for instance, rose by 0.7% in December, the biggest monthly increase since August 2022.
- But those price increases were offset by slower price increases (or outright declines in prices) in other categories.
- Prices for used vehicles fell by more than 1%. New car prices were flat in December, and were up just 0.3% from the prior year — one indicator that automakers have largely resisted passing on tariff-related costs to consumers.
What to watch: Consumer sentiment is at historic lows. The drop-off in inflation in recent years is little consolation for consumers who are frustrated with high price levels.
- Trump has announced a series of affordability-related plans in recent days aimed at easing the financial strain on consumers.
- On Monday night, Trump said he was in talks with Microsoft to ensure that Americans "don't pick up the tab" for the data centers necessary to power the AI boom, which have caused electricity prices to spike across the country.
- Nationwide, electricity prices fell slightly last month after a larger decline in September, though prices are up nearly 7% from the prior year.
Editor's note: This story has been updated with additional details.
