US inflation held firm in December amid pressure on Trump over cost of living

The Guardian | January 13, 2026 at 04:07 PM UTC

Bearish 83% Confidence Unanimous Agreement

Key Points

Month-over-month CPI rose 0.3% in December, with food prices and housing costs driving the increase, while core inflation (excluding food and energy) increased 0.2%
Trump claimed credit for 'LOW' inflation numbers despite his tariff policies, which economists warn could drive prices higher, and blamed the Biden administration for lingering inflation that peaked at 9.1% in June 2022
The inflation report was released as the Justice Department served the Federal Reserve with grand jury subpoenas, escalating concerns about threats to the central bank's independence after it resisted Trump's demands for deeper interest rate cuts

AI Summary

Summary: US Inflation Holds Steady in December as Trump Faces Economic Pressure

Key Data:

The US Consumer Price Index (CPI) rose 2.7% year-over-year in December, matching November's reading and exceeding the Federal Reserve's 2% target. Month-over-month, CPI increased 0.3%, while core inflation (excluding food and energy) rose 0.2%.

Main Drivers:

Food prices and housing costs were primary contributors to December's inflation. Chief US economist Samuel Tombs noted the core index growth reflected an "unwind of distortions" rather than strong underlying momentum.

Political Context:

The data arrives amid mounting pressure on President Trump over cost-of-living concerns. A Harris Poll conducted for The Guardian last month showed twice as many Americans expect prices to worsen rather than improve, with blame increasingly shifting to the current administration. Trump announced recent measures including initiatives on cryptocurrency and groceries to address affordability concerns.

Market Implications:

The persistent inflation above the Fed's target complicates monetary policy decisions. The report comes during an extraordinary conflict between Trump and the Federal Reserve over interest rate policy. Fed Chair Jerome Powell revealed the Department of Justice served the Fed with grand jury subpoenas, escalating concerns about central bank independence. The Fed cut rates three times in 2024 but resisted Trump's push for deeper cuts.

Economic Outlook:

Trump's tariff strategy faces scrutiny from economists warning of potential price increases. Senator Elizabeth Warren criticized Trump for failing to deliver on promises to lower costs "on day one," noting inflation remains higher than when his trade war began in April.

Model Analysis Breakdown

Model	Sentiment	Confidence
GPT-5-mini	Bearish	75%
Reasoning: Headline CPI holding at 2.7% (above the Fed's 2% target) and sticky food/housing costs reduces the near‑term likelihood of aggressive rate cuts, which is mildly negative for risk assets and bonds. Political pressure on the Fed and threats to its independence add policy uncertainty that can further weigh on markets.
Claude 4.5 Haiku	Bearish	85%
Reasoning: Inflation remains sticky at 2.7% (above Fed's 2% target), food and housing costs are rising, and political tension with the Fed threatens monetary policy independence. Consumer sentiment has shifted negatively toward the administration despite claims of falling prices.
Gemini 2.5 Flash	Bearish	90%
Reasoning: While inflation held firm in line with expectations, it remains significantly above the Fed's 2% target, limiting prospects for aggressive rate cuts. The escalating political pressure and criminal indictment threats against the Federal Reserve are a major bearish factor, undermining confidence in monetary policy independence.
Consensus	Bearish	83%

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Article Details

News ID: 3472652
Source: The Guardian
Analyzed: 42 days ago

Sentiment Confidence

Average Confidence 83%

High confidence in sentiment