The US core CPI year-over-year increased by 2.6% in December 2025, below the expected 2.7%, and the month-over-month growth rate of 0.2% also underperformed expectations, indicating a continued cooling of inflation. Housing costs remain the main driver, rising 0.4% month-over-month, but food prices saw a narrower increase of 0.7% (partially offset by beef shortages and a plunge in egg prices), and energy prices rose slightly by 0.3% month-over-month. Core goods prices showed no month-over-month growth, and prices for sensitive categories such as used cars and clothing stabilized, reflecting a weaker-than-expected pass-through of tariffs. After the data was released, the market's probability of a Fed rate cut in April increased to 42%, but short-term policy remains cautious due to persistent housing inflation and resilient employment market. Institutions generally believe that inflation in 2026 may follow a "high first, then low" pattern, with the timing of rate cuts possibly delayed until the second quarter.