U.S. Inflation Rises for First Time in Six Months, Surpassing Expectations

Inflation accelerated in December 2025, marking the first increase in six months and exceeding economists’ forecasts, according to the U.S. Bureau of Labor Statistics release on January 21, 2026. The Consumer Price Index rose 0.4% month-over-month, driven by higher prices for shelter, transportation, and food services. Core inflation, excluding food and energy, also climbed 0.3% for the month, reinforcing concerns that underlying price pressures remain persistent. The annual headline inflation rate reached 3.1%, up from 2.7% in November. Markets reacted swiftly: the S&P 500 dropped 1.2%, Treasury yields surged, and the dollar strengthened against major currencies. Investors now anticipate a delayed Federal Reserve rate cut, with futures pricing in a 60% chance of a hold at the March meeting.