The U.S. Consumer Price Index for urban consumers (CPI-U) rose 2.7% year-over-year in December 2025, matching the previous month’s reading and indicating a stabilization in inflation after several months of gradual deceleration. On a month-over-month basis, prices remained flat, with the CPI-U recording a 0.0% change from November to December. This pause in price growth reflects a balance between easing goods inflation and persistent but moderating increases in select service categories.
Notably, the year-over-year inflation rate has held steady at 2.7% for three consecutive months, following a peak of 3.0% in September. The recent plateau suggests that disinflationary momentum seen earlier in the second half of 2025 may have paused, though there is no indication of renewed upward pressure.
Analysts attribute the stable annual figure to countervailing forces across the index. Declines in energy and used vehicle prices helped offset increases in shelter and medical care costs. Seasonally adjusted data show that core services other than housing—often closely watched by policymakers—continued to cool, reinforcing expectations that underlying inflation remains on a downward trajectory. The absence of a month-over-month increase in December may also reflect effective monetary policy transmission and improved supply chain conditions.
“This flat print is consistent with an economy where demand pressures are broadly contained,” said Laura Simmons, senior economist at Beacon Economics. “The fact that inflation hasn’t ticked up despite holiday-season spending is encouraging.”
The Federal Reserve is likely to view the latest data as supportive of its current stance, with officials expected to maintain rates at their present level through early 2026. While the central bank continues to emphasize caution, the sustained moderation in CPI readings reduces near-term urgency for additional tightening. Market participants will now focus on January’s report, due in February, for signs of whether December’s stagnation marks a temporary pause or the beginning of a new phase of faster disinflation.
For now, the data suggest inflation is neither reaccelerating nor rapidly approaching the Fed’s 2% target—leaving policymakers in a holding pattern as they assess the broader economic outlook.