US Inflation Rate MoM for December 2025: Steady at 0.30%, Signaling Persistent Price Pressures
Key Takeaways: December 2025’s US inflation rate rose 0.30% month-over-month, matching expectations and maintaining the steady upward trend seen since mid-2025. This pace aligns with the 12-month average of 0.25%, underscoring persistent inflationary pressures despite tightening monetary policy. Core sectors such as shelter and food continue to drive inflation, while used car prices have stabilized. The data suggests the Federal Reserve’s rate hikes have yet to fully temper price growth, posing challenges for policymakers amid ongoing geopolitical risks and fiscal constraints.
Table of Contents
The US inflation rate for December 2025 registered a 0.30% increase month-over-month, consistent with the November 2025 figure of 0.30%, according to the latest release from the Sigmanomics database. This steady rise continues a pattern of moderate but persistent inflation that has characterized the US economy since mid-2025. Over the past six months, inflation has fluctuated between 0.10% and 0.50%, with February 2025 peaking at 0.50% and April 2025 briefly dipping into deflation at -0.10%. The 12-month average inflation rate stands at approximately 0.25%, indicating that December’s reading is slightly above the yearly trend.
Drivers this month
- Shelter costs contributed approximately 0.18 percentage points to the monthly increase.
- Food prices rose modestly, adding 0.07 percentage points.
- Used car prices stabilized, contributing near zero to inflation.
Policy pulse
The 0.30% monthly inflation rate remains above the Federal Reserve’s long-term target of 2% annualized inflation, implying continued pressure on monetary policymakers to maintain restrictive interest rates. The persistence of core inflation components, especially shelter, suggests that the Fed’s tightening cycle may need to extend further to achieve a durable slowdown.
Market lens
Immediate market reaction saw the USDEUR currency pair dip 0.15% as investors priced in a prolonged Fed tightening cycle. Short-term Treasury yields rose modestly, reflecting expectations of sustained higher rates. Equity markets showed mixed responses, with defensive sectors outperforming growth stocks.
December’s inflation reading must be contextualized alongside other core macroeconomic indicators. The US unemployment rate remained steady at 3.70%, indicating a tight labor market that supports wage growth and consumer spending. Retail sales for December showed a 0.40% increase, reinforcing demand-side inflation pressures. Meanwhile, producer price inflation (PPI) rose 0.20% month-over-month, suggesting input costs remain elevated but stable.
Monetary Policy & Financial Conditions
The Federal Reserve has raised the federal funds rate by 125 basis points since June 2025, aiming to cool inflation without triggering a recession. Financial conditions have tightened, with the 2-year Treasury yield climbing to 4.50%, reflecting market expectations of prolonged restrictive policy. Credit spreads have widened slightly, signaling cautious lending environments.
Fiscal Policy & Government Budget
Fiscal policy remains moderately expansionary, with the government running a deficit equivalent to 5% of GDP in Q4 2025. Stimulus measures and infrastructure spending continue to support aggregate demand, partially offsetting monetary tightening effects. The budget deficit trajectory adds complexity to inflation dynamics, as government borrowing can influence interest rates and inflation expectations.
What This Chart Tells Us
The inflation rate is trending upward in a controlled manner, reversing the brief dip in mid-2025. This pattern signals that inflationary pressures are entrenched, requiring ongoing vigilance from policymakers. The lack of a sharp decline points to structural factors underpinning price growth.
Market lens
Immediate reaction: The SPX index dipped 0.40% post-release, reflecting investor concerns over persistent inflation. The BTCUSD pair showed mild volatility, with traders weighing inflation’s impact on risk assets.
Looking ahead, inflation dynamics will hinge on several key factors. The Federal Reserve’s policy trajectory remains central, with markets pricing a 60% probability of at least one more rate hike in Q1 2026. Supply chain normalization and easing energy prices could moderate inflation, but wage growth and shelter costs may sustain upward pressure.
Bullish Scenario (20% probability)
- Inflation falls below 0.20% MoM by Q2 2026 due to improved supply chains and weaker demand.
- Fed pauses rate hikes, leading to easing financial conditions and market rally.
Base Scenario (60% probability)
- Inflation remains near 0.30% MoM through mid-2026, reflecting sticky core components.
- Fed maintains restrictive policy, balancing growth and inflation risks.
Bearish Scenario (20% probability)
- Inflation accelerates above 0.40% MoM due to geopolitical shocks or fiscal stimulus.
- Fed responds with aggressive rate hikes, risking recession and market volatility.
December 2025’s inflation rate of 0.30% MoM confirms that price pressures in the US remain persistent. Despite aggressive monetary tightening, core inflation components continue to rise, challenging the Federal Reserve’s goal of returning inflation to 2% annualized. Fiscal policy and external risks add complexity to the outlook. Market participants should prepare for a prolonged period of elevated inflation and cautious policy responses.
Key Markets Likely to React to Inflation Rate MoM
The US inflation rate is a critical driver for several key markets. The SPX (S&P 500) often reacts to inflation data as it influences corporate earnings and discount rates. The USDEUR currency pair is sensitive to Fed policy shifts triggered by inflation changes. The USDJPY also moves with US monetary policy expectations. In crypto markets, BTCUSD tends to reflect inflation fears and risk sentiment. Lastly, the TLT (long-term Treasury ETF) tracks bond market reactions to inflation and interest rate outlooks.
Inflation vs. SPX Since 2020
Since 2020, the S&P 500 has shown sensitivity to inflation trends. Periods of rising inflation, such as 2021 and early 2022, coincided with increased volatility and downward pressure on equities. Conversely, inflation moderation phases have supported market rallies. This relationship underscores the importance of inflation data for equity investors.
FAQ
- What does the December 2025 US inflation rate indicate?
- The 0.30% MoM inflation rate indicates persistent price pressures, especially in core sectors like shelter and food, despite monetary tightening.
- How does this inflation reading affect Federal Reserve policy?
- The steady inflation suggests the Fed may maintain or increase interest rates to achieve its 2% target, balancing growth risks.
- Which markets are most impacted by US inflation data?
- Key markets include the S&P 500 (SPX), USDEUR and USDJPY currency pairs, BTCUSD in crypto, and long-term Treasury bonds (TLT).
Takeaway: December 2025’s inflation data confirms that US price pressures remain entrenched, requiring continued vigilance from policymakers and market participants alike.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
SPX – S&P 500 index, sensitive to inflation via earnings and discount rates.USDEUR – US Dollar to Euro currency pair, reacts to Fed policy shifts.
USDJPY – US Dollar to Japanese Yen, influenced by US monetary policy.
BTCUSD – Bitcoin to US Dollar, reflects inflation fears and risk sentiment.
TLT – Long-term Treasury ETF, tracks bond market inflation expectations.
The December 2025 inflation rate of 0.30% month-over-month matches November’s 0.30% and exceeds the 12-month average of 0.25%. This steady pace contrasts with the volatility seen earlier in 2025, where monthly inflation ranged from -0.10% in April to 0.50% in February. The chart below illustrates the persistence of inflation pressures despite monetary tightening.
Comparing December to October 2025 (0.30%) and September 2025 (0.40%) reveals a plateauing trend rather than a sharp decline. This suggests that while inflation is not accelerating, it remains sticky, particularly in core components such as shelter and food.