Inflation Research Brief

Disinflation progress remains uneven. December’s CPI report showed inflation holding at a moderate pace. Headline CPI rose 0.3 percent month-over-month and increased 2.7 percent from a year earlier, while core CPI rose 0.2 percent over the month and 2.6 percent year-over-year. Core goods prices were flat in December, indicating that firms are still absorbing a significant portion of tariff-related cost increases rather than passing them on to consumers. Meanwhile, core services edged up and continued to drive the bulk of inflation, as wage growth keeps pricing firm in many service categories. This month’s report is unlikely to alter the Fed’s near-term holding stance, though a combination of contained inflation and further labor-market cooling would strengthen the case for future rate cuts.