CPI Data set to show steady US inflation in December, still above Fed’s target
- The US Consumer Price Index is seen rising 2.7% YoY in December.
- Core CPI inflation should remain sticky well above the Fed’s goal.
- Investors have so far pencilled in 50 bps of easing this year.
The US Bureau of Labor Statistics (BLS) will publish December’s Consumer Price Index (CPI) report on Tuesday at 13:30 GMT. The report is expected to show that prices remained broadly stable in the last month of 2025. As always, it’s a key read on inflation and could stir some short-term moves in the US Dollar (USD).
That said, it’s unlikely to shift the bigger picture for the Federal Reserve (Fed) just yet. With policymakers still focused primarily on the health of the domestic labour market, the data would probably need to deliver a real surprise to trigger any rethink on monetary policy.
What to expect in the next CPI data report?
Inflation itself isn’t expected to spring many surprises. Headline CPI is seen rising 2.7% YoY in December, unchanged from the previous month. Strip out the more volatile food and energy components, and the picture is much the same: core inflation is forecast to edge up slightly to 2.7% from 2.6%, still uncomfortably above the Fed’s target.
On a monthly basis, both headline and core CPI are expected to come in at a fairly steady 0.3%, reinforcing the idea of inflation that’s easing only slowly rather than rolling over.
That also helps explain why December’s rate cut was never a slam dunk. The Minutes released on December 30 show a deeply split Committee, with several officials saying the call was finely balanced and that leaving rates unchanged was a very real alternative.
Previewing the report, analysts at TD Securities noted, “Following the impact from the government shutdown, we now anticipate the core segment to peak at 3% in Q2. We remain of the view that gradual disinflation will be the story in H2 2026. We expect core CPI inflation to end the year at 2.6%.”
How could the US Consumer Price Index report affect EUR/USD?
Investors are still chewing over a mixed set of signals from December’s Nonfarm Payrolls (NFP), but that debate is starting to take a back seat. Fresh threats to the Fed’s independence have resurfaced, and they risk overshadowing the significance of Tuesday’s inflation data altogether.
Given that the Fed is still keeping a close eye on the labour market, December’s CPI numbers are unlikely to change the policy picture in any meaningful way, unless inflation throws up a genuine surprise, one way or the other.
Turning to EUR/USD, Pablo Piovano, Senior Analyst at FXStreet, shared his technical outlook. “If EUR/USD decisively slips below the short-term 55-day moving average at 1.1639, it would open the door to a deeper pullback, with the 200-day SMA at 1.1561 coming into focus sooner rather than later,” he notes. “Below that, attention would turn to the November low at 1.1468 (November 5), followed by the August trough at 1.1391 (August 1).”
“On the flip side, a clean break above the December peak at 1.1807 (December 24) would shift the tone back to the upside. That would put the 2025 high at 1.1918 (September 17) on the radar, with the psychologically important 1.2000 level lurking just beyond,” Piovano adds.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Last release: Fri Oct 24, 2025 12:30
Frequency: Monthly
Actual: 0.3%
Consensus: 0.4%
Previous: 0.4%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
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