Inflation rose more quickly than expected in December

Associated Press (AP)EN 3 min read 100% complete by By CHRISTOPHER RUGABERFebruary 20, 2026 at 02:53 PM

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A Commerce Department report released Friday revealed that inflation rose faster than expected in December, reaching its quickest pace in nearly a year. The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, increased by 0.4% from November to December, and 2.9% compared to the previous year, the largest yearly increase since March 2024. Core prices, excluding food and energy, also rose 0.4% monthly and 3% annually. The report, delayed due to a government shutdown, indicates that inflation remains elevated despite being down from its 2022 peak. This persistent inflation contributes to economic dissatisfaction among Americans, even with low unemployment and solid growth. The PCE index is running higher than the Consumer Price Index because it puts less weight on areas where price growth has cooled.