U.S. Consumer Prices Surge Amid Government Shutdown Aftermath

Consumer prices in the U.S. rose in December, spurred by the resolution of data distortions from a previous government shutdown. Economists predict a 0.3% increase in CPI, influenced by higher food and energy costs. Anticipations of future inflation rise amid political tensions and ongoing trade tariffs.

In December, U.S. consumer prices witnessed a notable increase, driven by the repercussions of the government shutdown that had previously obscured inflation figures. This shift is expected to maintain the Federal Reserve's current interest rate strategy, as economists forecast a consumer price index (CPI) rise of 0.3% last month.

The distortions in price data, particularly affecting rents and goods, stemmed from the shutdown's impact on data collection processes. These disruptions stalled accurate readings in November, leading to the use of carry-forward methodologies by the Bureau of Labor Statistics (BLS). The recently concluded shutdown suggests a payback effect in the CPI report, although full resolution is anticipated with the April 2026 data release.

As tensions escalate between Federal Reserve Chair Jerome Powell and President Trump, the political climate has further underlined economic uncertainties. Despite the pressures, a rate cut remains unlikely before Powell's tenure ends in May, adding another layer of complexity to the inflation narrative influenced by tariffs and geopolitical concerns.

(With inputs from agencies.)