Expectations of Rising US Inflation Following Mixed Data in November

SadaNews - It is likely that inflation recorded a slight increase in the United States during December 2025, reflecting a continued gradual decline in pricing pressures.

Estimates indicate that the core Consumer Price Index, which excludes food and energy to measure core inflation, rose by 2.7% year-on-year, compared to 2.6% in November, marking the lowest annual rate since early 2021.

On a monthly basis, economists expect an increase of 0.3% for both the headline and core indexes. Monthly data in the November report was absent due to the inability to publish it by the Bureau of Labor Statistics as a result of the longest government shutdown in the country's history, which affected price collection in October.

Economists noted that the November report reflected a broad slowdown in the pace of inflation; however, it was distorted due to poor data quality in October, particularly concerning the absence of accurate pricing for key components such as rents, which the report assumed remained largely unchanged.

The upcoming December report, expected to be released on Tuesday, is expected to reflect this downward bias, which may lead to a higher reading of inflation. The absence of precise indicators alongside signs of stabilization in the labor market following a series of weak job data are among the reasons prompting the Federal Reserve to pause in adjusting interest rates in the near term.

Bloomberg Economics: December Reading May Mislead Some

Experts at "Bloomberg Economics" stated: "We believe that the Consumer Price Index report will fuel some misleading narratives. The December reading is likely to be elevated, but that is primarily due to the removal of the downward bias contained in November's figures. Some analysts may interpret this reading as a sign of inflation returning, but we see it as a misleading reading."

They added: "We agree that the November report overestimated the slowdown, perhaps by about 20 basis points, but we also see that retailers have been cutting prices, and the impact of tariffs has already peaked for some goods."

— Anna Wong, Stuart Paul, Eliza Winger, Chris G. Collins, Alex Tanzi, and Troy Dorr, economists at Bloomberg.

Anticipated Statements from the Federal Reserve and Important Economic Data

John Williams, President of the Federal Reserve Bank of New York, is expected to begin a series of public appearances this week alongside several senior officials from the central bank, including Alberto Musalem, Anna Paulson, Michelle Bowman, and Philip Jefferson, to discuss the current economic conditions.

At the same time, consumer spending during the fourth quarter shows remarkable resilience, as retail sales data, set to be released on Wednesday, is expected to show strong increases. Economists expect a 0.4% rise in retail sales, excluding automobiles, in November, which corresponds to the gains of October.

Other economic reports are also expected this week, including new home sales for October, the Producer Price Index for November, industrial production for December, and existing home sales.

Canada, India, and Europe Under the Microscope

In Canada, "Statistics Canada" will release data on securities flows, following an increase in foreign investments in Canadian stocks and bonds. Data on manufacturing and wholesale sales will also be published, along with travel indicators expected to show continued declines in trips to the United States, as well as population estimates highlighting the effects of strict immigration policies.

Elsewhere, attention turns to inflation data in India, growth figures in both Germany and the United Kingdom, along with a possible decision to maintain interest rates in South Korea. Investors are also awaiting comments from G7 finance ministers during their meeting scheduled in Washington early in the week.