US Dec. core PCE price index rises 0.355%

US Dec. core PCE price index rises 0.355%

U.S. Core PCE Price Index Rises 0.355% in December 2025, Reflecting Persistent Inflationary Pressures

The U.S. core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's primary inflation benchmark, increased by 0.355% in December 2025, according to the Bureau of Economic Analysis. This marks a notable acceleration from the 0.2% monthly rise recorded in November 2025. On an annual basis, core PCE inflation stood at 2.8% for the 12 months ending in December, up from 2.7% in November and well above the Fed's 2% target.

The annual increase aligns with economists' forecasts, which had anticipated a slight uptick in inflation amid ongoing cost pressures from sectors such as housing, healthcare, and services. The monthly 0.355% rise, however, exceeded expectations, signaling a sharper-than-anticipated surge in consumer prices. This trend contrasts with recent optimism driven by a slower-than-expected December CPI reading, another inflation gauge.

The core PCE index excludes volatile food and energy prices, making it a more stable indicator of underlying inflation trends. Analysts attribute the December acceleration to factors such as lingering supply chain disruptions and the gradual pass-through of tariffs to consumers. Goldman Sachs economists projected core PCE inflation could reach 3.05% annually by year-end, the highest level since March 2024.

The data complicates the Federal Reserve's policy outlook. With inflation persistently above target for nearly five years, policymakers may delay rate cuts to avoid undermining progress toward price stability. Deutsche Bank economists noted that "more clarity on inflation trends" is needed before further rate reductions can be justified, particularly as labor market risks appear to recede.

Looking ahead, core PCE inflation is projected to trend near 2.9% in early 2026, with long-term forecasts pointing to a gradual decline toward 2.1% by 2027. The next PCE report, scheduled for March 2026, will provide further insight into inflation's trajectory amid evolving economic conditions.