U.S. inflation rose 2.7% on an annual basis in December, government data showed Tuesday, following a federal shutdown that is considered to have artificially lowered inflation in November, when prices also advanced at the same level.
The Consumer Price Index (CPI) rose 0.3% month-over-month, the Labor Department's Bureau of Labor Statistics (BLS) said on Tuesday.
In the 12 months through December, the CPI advanced 2.7%, matching November's gain.
Economists polled by Reuters had forecast the CPI picking up 0.3%. The BLS estimated the CPI rose 0.2% from September to November.
The 43-day shutdown prevented the collection of prices for October, resulting in the BLS using a carry-forward method to impute data, especially for rents, to compile November's CPI report. While prices for November were collected, that was not until the second half of the month, when retailers were offering holiday season discounts.
The carry-forward imputation method treated October prices as unchanged. U.S. President Donald Trump's sweeping import tariffs have raised goods prices, creating an affordability challenge for households.
While prices have not officially surged as much in the final months of 2025, inflation crept up during the year as Trump imposed wave after wave of tariffs, hitting goods from virtually all trading partners.
But the Trump administration has, in recent months, widened a slate of exemptions covering key agriculture products and other items as cost-of-living concerns gripped households.
Businesses have reported higher costs, although many have tried to soften the blow by stocking up on inventory ahead of planned hikes in duties, and avoided passing on the full additional costs to consumers.
High inflation has eroded Trump's approval ratings and will be a political hot button this year as the U.S. president and his fellow Republicans battle to retain control of the U.S. Congress.
Excluding the volatile food and energy components, the CPI increased 0.2% in December.
The so-called core CPI rose 2.6% year-over-year in December after rising by the same margin in November. The BLS estimated the core CPI climbed 0.2% from September to November.
The Federal Reserve (Fed) tracks the Personal Consumption Expenditures Price indexes for its 2% inflation target.
The pick-up in consumer inflation followed news last week that the unemployment rate dipped in December, even as job growth was tepid. The U.S. central bank is expected to keep its benchmark overnight interest rate in the 3.50%-3.75% range at its Jan. 27-28 meeting.
An escalation in tensions between Fed Chair Jerome Powell and Trump has left most economists not expecting a rate cut before Powell's term ends in May. The Trump administration has opened a criminal investigation into Powell, which the Fed chief called a "pretext" to influence rates.
