North America Inflation Rate MoM: December 2025 Release and Macro Outlook
The latest inflation rate month-over-month (MoM) data for North America, released on December 4, 2025, shows a surprising flat print of 0.00%, sharply below the 0.30% consensus estimate and down from November’s 0.50% reading. This report, sourced from the Sigmanomics database, marks a significant deceleration in price pressures across the region. This analysis reviews the geographic and temporal context, core macro indicators, monetary and fiscal policy implications, external risks, financial market responses, and structural trends shaping the inflation outlook.
Table of Contents
The December 2025 inflation rate MoM for North America registered at 0.00%, a notable slowdown from the 0.50% rise in November and well below the 0.30% forecast. This marks the first month in over a year without any upward price movement, contrasting with the 12-month average MoM inflation of approximately 0.25% recorded since late 2024. The data covers the entire North American region, including the United States, Canada, and Mexico, reflecting broad-based price stability after a period of elevated inflation.
Drivers this month
- Shelter costs stabilized, contributing near zero to headline inflation after adding 0.18 percentage points (pp) in November.
- Energy prices declined modestly, subtracting approximately 0.05 pp from the monthly inflation rate.
- Used vehicle prices showed no further increases, halting a prior upward trend.
Policy pulse
The 0.00% MoM inflation reading sits comfortably below the Federal Reserve’s 2% annual target pace, signaling easing price pressures. This may reduce urgency for further monetary tightening, as inflation momentum appears to be waning.
Market lens
Immediate reaction: The USD index weakened 0.30% within the first hour post-release, reflecting diminished expectations for aggressive Fed hikes. Short-term Treasury yields fell by 5 basis points, while breakeven inflation rates for 2-year TIPS declined 10 basis points, signaling lower inflation risk premia.
Core macroeconomic indicators provide essential context for the inflation print. The unemployment rate in North America remains steady at 3.80%, near historic lows, supporting wage growth but not yet translating into higher consumer prices. Retail sales growth slowed to 0.20% MoM in November, down from 0.50% the prior month, indicating softer demand. Producer Price Index (PPI) data also showed a deceleration, with a 0.10% MoM increase versus 0.40% in October.
Monetary policy & financial conditions
The Federal Reserve and Bank of Canada have maintained restrictive policy stances since mid-2025, with policy rates at 5.25% and 4.75%, respectively. Financial conditions have tightened, reflected in higher lending spreads and subdued credit growth. The flat inflation reading may prompt central banks to pause rate hikes, balancing inflation control with growth risks.
Fiscal policy & government budget
Fiscal stimulus has been modest, with North American governments focusing on deficit reduction and targeted social spending. The latest budget reports show a narrowing deficit, which supports a stable macroeconomic environment but limits fiscal levers to counteract inflation shocks.
This chart signals a potential inflection point in inflation dynamics. The zero MoM inflation suggests that price pressures may have peaked, with risks skewed towards disinflation in the near term. However, vigilance remains necessary given ongoing geopolitical uncertainties and labor market tightness.
Market lens
Immediate reaction: Equity markets rallied modestly, with the S&P 500 gaining 0.40% post-release, reflecting optimism about reduced inflation risk. The Canadian dollar weakened 0.20% against the USD, consistent with expectations of a slower pace of Bank of Canada tightening.
Looking ahead, three scenarios emerge for North America’s inflation trajectory over the next six months:
- Bullish (30% probability): Inflation remains subdued or declines further, allowing central banks to pause or cut rates by mid-2026. This scenario assumes stable energy prices and no major supply shocks.
- Base (50% probability): Inflation hovers near 0.10–0.20% MoM, with moderate wage growth and balanced demand. Monetary policy remains steady, supporting gradual economic growth.
- Bearish (20% probability): Inflation rebounds above 0.40% MoM due to renewed energy price shocks or tighter labor markets, forcing additional rate hikes and risking growth slowdown.
External shocks such as geopolitical tensions in Eastern Europe and supply chain disruptions in Asia remain key downside risks. Conversely, technological advances and productivity gains could further ease inflationary pressures.
The December 2025 North America inflation rate MoM print of 0.00% marks a critical juncture. It signals a pause in inflation acceleration, providing breathing room for monetary policymakers. However, the balance of risks remains finely poised between disinflationary forces and potential shocks. Market participants should monitor wage trends, energy prices, and geopolitical developments closely. The evolving inflation landscape will shape financial conditions and growth prospects well into 2026.
Key Markets Likely to React to Inflation Rate MoM
Inflation data directly influences interest rates, currency valuations, and equity market sentiment. The following tradable symbols historically track North American inflation trends closely:
- SPX – S&P 500 index, sensitive to inflation-driven monetary policy shifts.
- USDCAD – USD/CAD currency pair, reflecting divergent central bank policies amid inflation changes.
- TSLA – Tesla stock, impacted by inflation through input costs and consumer demand.
- BTCUSD – Bitcoin, often viewed as an inflation hedge and risk asset.
- EURUSD – Euro/US dollar pair, sensitive to US inflation data and Fed policy outlook.
Inflation Rate MoM vs. SPX Since 2020
Since 2020, the S&P 500 (SPX) has shown a moderate inverse correlation with North American inflation MoM readings. Periods of rising inflation often coincide with market volatility and short-term pullbacks, while inflation stabilization or declines tend to support equity rallies. The December 2025 zero inflation print aligns with a recent SPX rebound, underscoring the market’s sensitivity to inflation dynamics and monetary policy expectations.
FAQs
- What does the December 2025 North America Inflation Rate MoM indicate?
- The 0.00% MoM reading indicates a pause in price increases, suggesting easing inflation pressures in the region.
- How does this inflation data affect monetary policy?
- Lower inflation momentum reduces pressure on central banks to raise interest rates further, potentially leading to a pause or slower tightening.
- What are the risks to the inflation outlook?
- Risks include energy price shocks, geopolitical tensions, and tight labor markets that could reignite inflation pressures.
Key takeaway: The December 2025 zero MoM inflation print signals a critical pause in North American inflation, easing monetary policy pressures but leaving risks balanced amid uncertain global conditions.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Sources
- Sigmanomics database, North America Inflation Rate MoM, December 2025 release.
- Federal Reserve Economic Data (FRED), November 2025 macro indicators.
- Bank of Canada, Monetary Policy Report, December 2025.
- U.S. Bureau of Labor Statistics, Producer Price Index, November 2025.
- North American Government Budget Reports, Q4 2025.
Selected Tradable Symbols
- SPX – S&P 500 index, closely tied to inflation and Fed policy shifts.
- USDCAD – USD/CAD currency pair, sensitive to North American inflation and central bank divergence.
- TSLA – Tesla stock, impacted by inflation-driven input costs and consumer demand.
- BTCUSD – Bitcoin, often viewed as an inflation hedge and risk asset.
- EURUSD – Euro/US dollar pair, reacts to US inflation data and Fed outlook.
The December inflation rate MoM of 0.00% contrasts sharply with November’s 0.50% and the 12-month average of 0.25%. This reversal highlights a pause in the inflation acceleration seen earlier in 2025. Energy and shelter components, which previously drove inflation higher, have flattened or declined, contributing to the zero growth in headline prices.
Comparing the current print with historical data, the last time North America saw a zero MoM inflation reading was in March 2024, during a brief cooling period after a spike in commodity prices. The current environment differs, however, as supply chain pressures have eased and demand growth has moderated.