The final inflation report of 2025 will be released Tuesday morning, closing the book on a year when the pace of inflation slowed but prices themselves did not fall on an objective basis.
Inflation most likely continued rising in December, analysts say, in what could be the latest sign of the affordability crisis that consumers have been describing in recent months.
After an unusual two-month report released in mid-December showed inflation increasing 0.2% during October and November, economists expect to see an increase of 0.3% from November to December.
On an annual basis, the rate of inflation is expected to continue rising at 2.7%, which would match the previous report’s figure.
Analysts at UBS said they expect the December reading to “be the strongest monthly increase since January” 2025, with core inflation — a measure that excludes volatile food and energy prices — projected to rise 0.44%.
Consumers were also likely to have felt a sharp rise in food prices during December, the UBS analysts wrote.
“Food at home prices are looking to have a fairly large increase,” the team said. “Eggs are no longer seeing price declines and ham and fresh fruits (among other components) are seeing price increases.”
The Trump administration continues to roll out policy plans aimed at driving down prices for everyday goods.
It’s a task made more urgent by the politics of an election year in Washington. Some members of Congress will face their first round of party primary challengers as soon as March.
In just the last few days, President Donald Trump has demanded that oil companies invest in and export Venezuelan oil as part of a broader effort to drive down gas prices. He has ordered $200 billion worth of mortgage bond purchases aimed at reducing residential mortgage rates and has instructed credit card companies to cap interest charges at 10% for one year.
The administration’s focus on bringing down costs has also kept interest rates at the center of his economic messaging, with Trump continuing to call on the Federal Reserve to cut rates.
The announcement Sunday of a Justice Department criminal investigation of the Federal Reserve sent tremors through Wall Street and Washington, raising questions about the independence of an institution designed to operate free from political interference.
The investigation arrives just ahead of the central bank’s next interest rate policy decision later this month, when officials are widely expected to hold rates steady.
Lower borrowing costs can stimulate economic growth by making it easier for consumers to finance big purchases like cars and mortgages, for example, and for businesses to take out loans to expand.
“The Fed remains more focused on the labor market than inflation,” Bank of America economists said Monday.
Tuesday’s inflation report is also expected to show “some distortions” due to the historically long government shutdown at the end of last year, Citigroup analysts wrote Monday.
“Inflation remains a challenge,” Seema Shah of Principal Asset Management wrote in a note to clients.
Since Trump rolled out sweeping tariffs on his self-proclaimed “Liberation Day” in April 2025, “imported goods prices have risen by 3%, while domestic goods prices have increased by a similar amount,” Shah wrote.
The amount of price increases passed on to consumers as a result of tariffs has been “limited,” she wrote.
Not everyone believes inflation will rise only three-tenths of a percent, though.
Analysts at JPMorgan said the September-to-November rates of inflation were pushed down because of the government shutdown and the timing of late-November holiday sales.
“The December report should correct some of these biases, and will thus result in a rather firm month-on-month increase,” they wrote.
