Is Inflation Back? December CPI Data Shows Sharp Rebound in Price Pressures

Inflation Makes a Comeback

The upcoming December CPI report is set to reveal a stronger-than-expected rebound in U.S. inflation. Forecast models suggest headline prices rose 0.37% month-over-month, with annual inflation holding at 2.7%. Core CPI, which excludes food and energy, is expected to rise 0.36% monthly and 2.8% annually.

Key Drivers Behind the Surge

This resurgence isn't isolated. Delayed data collection in November and elevated urban living costs—particularly in shelter and transportation—contributed to an estimated 11-basis-point lift in core inflation.

What This Means for Markets

• Energy prices are warming up, adding upward pressure
• Housing costs, a major component of CPI, continue to weigh in
• Stubborn service-sector inflation keeps rate-cut hopes in check

As disinflation momentum falters, Wall Street is recalibrating expectations. The anticipated mid-year rate cuts by the Fed may be delayed, with higher-for-longer interest rates becoming the new base scenario.