December Inflation Surges Beyond Expectations

Bassyonni

Published: February 21, 2026 12:39 AM ET

Inflation surged in December, surpassing expectations and indicating continued economic pressure on consumers. The latest report from the Commerce Department highlights a notable increase in prices, signaling a challenge for policymakers.

December Inflation Surges Beyond Expectations

In December, prices rose by 0.4% compared to the previous month. This increase marked a rise from a 0.2% gain in November. It was the highest monthly inflation rate since February of the previous year.

Year-Over-Year Inflation Rates

Year-over-year, inflation climbed to 2.9% in December, a slight uptick from November’s 2.8%. This is the most significant yearly increase since March 2024. When examining core prices—excluding the volatile food and energy sectors—the index also rose by 0.4%, consistent with the previous month’s rate.

Factors Influencing Inflation

Core inflation increased by 3% year-over-year in December, exceeding the 2.8% rise noted in November. These figures suggest that inflation remains a concern, despite being lower than the nearly 7% peak recorded in 2022.

Monthly inflation rate: 0.4% in December
Yearly inflation rate: 2.9% in December
Core inflation increase: 3% year-over-year
Highest monthly rate since: February

Consumer Spending Insights

Consumer spending showed resilience in December, also rising by 0.4% month-over-month, maintaining the same pace as November. Key categories driving this spending included furniture, clothing, and groceries, although gas prices fell during this period.

Energy Costs Fluctuate

Energy prices presented a mixed picture. The cost of electricity rose, while natural gas prices surged by 3.7% in December alone. Such fluctuations can impact overall inflation rates and consumer sentiment regarding economic stability.

Federal Reserve’s Stance

The Federal Reserve, during its late January meeting, chose to maintain the short-term interest rate at approximately 3.6%, reflecting a cautious approach to monetary policy. Officials indicated a desire to see inflation return to their target before endorsing additional rate cuts.

These recent inflation trends underline persistent economic challenges for American consumers, despite the overall health of the job market and economic growth. The latest data reflects the ongoing complexity of managing inflation in the current economic landscape.