Is inflation increasing?
Posted on January 16, 2026

Nope. Inflation reported Tuesday shows a small uptick in inflation for December, but inflation over the last six months is not much different from prior months. Our annual rate of inflation is about 2.6%, and this is not much different than the last six-eight months. It’s not pointing to the Federal Reserve’s target of 2%, but one cannot conclude that it’s increasing.

 

I display a table and four graphs that I use to follow the trends in inflation. One that I normally include has not been updated since September.

 

 

Details:

 

The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.

 

Seasonally-adjusted inflation is the most widely reported measure of inflation. December inflation was higher than the average for October and November, and higher than nine of the prior 11. But the rate for last six months was at 2.8% annual rate; that’s the same rate as the prior four months. The 12-month rate is 2.7%.

 

 

Core inflation excludes volatile energy and food components. It’s a similar story to seasonally-adjusted inflation. The last six months run at 2.6% inflation, and the 12-month rate is 2.6%.

 

 

Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. I exclude this chart: it hasn’t been updated since September.

 

== History of 12-month inflation rates ==

 

Full-year inflation measured by CPI-U was 2.7%. That’s 0.1% less than last month. We’ve been bobbling around that rate for about 18 months.

 

 

I add a graph that shows the last three months have been below 0% inflation. The more volatile energy prices have declined over the past year. October, November and December in 2024 were also extremely low.

 

 

== Producer’s Price Index ==

 

This chart was updated this week through November. The six-moth rate is at 2.2% annual rate.

 

 

== Services ==

 

Inflation for services for the last six months average to 2.8% annual rate. The 12-month rate is 3.0%.

 

 

 

Conclusion: The inflation measures released this week for December were in line with past months. We have not seen much of an increase due to greater tariffs. Inflation runs at about 2.6%. We are not trending to the Federal Reserve’s goal of 2% annual inflation.