Consumer spending surged more than anticipated in December, even as price growth aligned with economist expectations, capping off 2025 with robust economic activity, according to the latest data from the Bureau of Economic Analysis,
- Consumer prices rose 0.3% in December, marking an increase from the 0.1% rise in November and the largest monthly gain since April.
- This pushed the annual inflation rate to 2.6%, up from 2.4% in the prior month and the highest level recorded since April.
Core prices, which exclude volatile food and energy components, increased by 0.2% in December, keeping the annual index steady at 2.8% for the third consecutive month.
- Both headline and core inflation figures came in exactly as economists had forecasted, reinforcing expectations that inflationary pressures remain stable yet persistent.
Spending & Income: While price growth met expectations, personal income and spending figures exceeded projections. Personal income rose slightly more than anticipated (0.4%), contributing to a notable increase in consumer spending.
- Spending climbed 0.7% in December, up from 0.6% in November, marking the third time this year that spending has surged at such a pace. This also represents the highest level of consumer spending recorded throughout 2025.
Bottom Line: December’s data underscores the resilience of consumer demand despite higher prices, suggesting that strong wage growth and a robust labor market may be sustaining purchasing power keeping inflation at higher levels.
