The latest inflation report delivered a political and economic win for President Donald Trump on Tuesday.
The Consumer Price Index showed inflation cooling more than many experts expected, easing concerns about rising costs for American families.
Markets reacted calmly as investors reviewed the December CPI, a key measure of how fast prices are rising.
The S&P 500, the Nasdaq, and the Dow Jones were mostly flat after an initial bump following the report, and after none came crashing down over the investigation of Federal Reserve Chair Jerome Powell.
The data showed that prices excluding food and energy rose just 0.2 percent in December and 2.6 percent over the past year.
Both figures came in below economists’ forecasts, signaling much slower price increases than predicted.
Overall inflation, which includes all goods and services, rose in line with expectations at 0.3 percent for the month and 2.7 percent for the year.
JUST IN: US inflation continues to come in lower than expected: 2.7% in December and Core Inflation (which doesn’t include food or energy costs) was 2.6% in December.
Food and energy (mainly utilities) continue to be key drivers of inflation right now. These are costs that all… pic.twitter.com/AFfvRcNyjv
— Heather Long (@byHeatherLong) January 13, 2026
As CNBC noted, the good news comes days after a jobs report showed that while the labor market is not red hot, it is stable.
The numbers also challenge repeated claims that Trump’s tariffs would send inflation through the roof.
Wall Street is coming off a record-setting session, with major stock indexes closing at all-time highs on Monday.
The Dow closed at 4,590.20 on Monday after briefly reaching a high of 49,633.35.
When Trump began enacting his new trade policies last year, there was no shortage of economists predicting long-term pain for consumers and investors.
Economist Justin Wolfers commented, “Monstrously destructive, incoherent, ill-informed tariffs based on fabrications, imagined wrongs, discredited theories and ignorance of decades of evidence. And the real tragedy is that they will hurt working Americans more than anyone else.”
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