U.S. Inflation Cools in December. But the Fed Isn’t Rushing Yet
December CPI came in cooler than feared, offering some relief after years of cost-of-living pressure.
Key points:
• Headline inflation: 2.7% YoY (unchanged from November)
• Core inflation: 2.6% YoY, below expectations
• Used car prices fell 1.1% MoM, gas prices down 0.5%
• Core goods prices stayed flat for the first time since May
• Food prices jumped 0.7% MoM – fastest pace in 3+ years
Why this matters:
Tariffs were expected to push prices higher, but goods inflation remains surprisingly muted. Retailers appear to be absorbing costs through lower margins instead of passing them to consumers.
Fed outlook:
Despite improving inflation data, markets still expect the Fed to pause rate cuts at the next meeting. Rates remain restrictive, and policymakers want more evidence before easing further, especially with food and shelter costs still rising.
Investor takeaway:
This report supports a soft-landing narrative but doesn’t justify aggressive rate cuts yet. Bonds, quality dividend stocks, and rate-sensitive assets remain highly data-dependent going forward.
Steady disinflation = opportunity, not complacency.
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Sat Feb 14 2026 03:36:55 GMT+0000 (Coordinated Universal Time)
