Consumer prices in the United States remained tame in December, pushed down by a significant decline in the price of gasoline and zero inflation in the prices of core goods that many thought would face pressure from tariffs.
The consumer price index rose 2.7 percent in 2025, matching expectations and unchanged from the 12-month number reported in the prior month. Core CPI, a measure that excludes energy and food prices, rose 2.6 percent, also matching the prior month and better than expected.
Over the month, the overall basket rose 0.3 percent, and the core basket rose 0.2 percent.
The new data indicate that the low inflation recorded in November, following the government shutdown, was not a statistical fluke or the result of bad data. The outright decline in prices and fall in inflation in many tariffed goods suggests that any pass-through of tariffs to consumer prices has run its course and pushed up prices by far less than tariff opponents had predicted.
“Many observers thought the downside surprise in November’s CPI was all fluke – but December’s tepid report shows it was less of a fluke and more of a signal. While a big part of December’s downside surprise was related to used cars, many of the items exposed to tariffs saw price cuts, continuing what’s now a multi-month trend,” the analysts at Bloomberg Economics wrote Tuesday after the CPI report was released. “Based on our tracking of online prices, Bloomberg Economics believes tariff pass-through peaked in October.”
Core goods prices—a measure that excludes food and energy, which many economists would expect to face tariff pressure—were flat for the month and up just 1.4 percent from a year ago. This was much better than expected. New car prices were flat for the month and are up just 0.3 percent from a year earlier. Used car prices fell 1.1 percent and are up 1.6 percent from a year ago.
The prices of appliances fell by 4.3 percent in December, even after adjustment for holiday discounts. Compared with a year ago, appliance prices are down 1.7 percent, upending expectations that this heavily imported category would face tariff price pressure. Household furniture prices, a category that has seen what appears to be tariff-driven price increases, fell 0.4 percent in December, bringing the year-over-year increase to 3.6 percent.
Clothing prices rose 0.6 percent after adjusting for the holiday season’s sales. Prior to adjustments, prices fell 1.3 percent. Compared with a year ago, apparel prices are up a slight 0.6 percent.
The index for gasoline is down 3.4 percent from a year ago and fell by half a percentage point in December, after seasonal adjustments. Before seasonal adjustments, the price of gasoline fell 5.3 percent in December.
The shelter index increased by a sharp 0.4 percent in December. The index for rent and a measure of the implied cost of home-ownership (called the homeowners’ equivalent of rent) rose by 0.3 percent. The lodging index, which covers hotels and motels, rose by 2.9 percent for the year.
There was still inflationary pressures at the grocery store. The index for food at home rose 0.7 percent in December but it is up just 2.4 percent from a year ago.
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