December CPI rebound expected after shutdown-softened November: Wells Fargo

• Wells Fargo forecasts December headline CPI to rise 0.35% monthly and core CPI to increase 0.36%, reversing November's artificially suppressed readings caused by shutdown-related data collection issues
• Goods prices expected to drive the rebound with core goods up 0.37% monthly and 1.8% year-over-year, while shelter inflation will lag due to methodological factors with no payback expected until April
• The December CPI report will be released January 13 at 8:30am Eastern Time, with year-over-year rates remaining lower than September levels, signaling inflation's continued descent

Summary

Wells Fargo analysts anticipate December's Consumer Price Index (CPI) report will show a monthly inflation rebound following November's unusually weak reading, which was distorted by data collection issues during the longest-ever US federal government shutdown.

Key Projections:

• Headline CPI: 2.7% year-over-year, 0.35% month-over-month
• Core CPI: 2.8% year-over-year, 0.36% month-over-month
• Core goods prices: 0.37% monthly increase, 1.8% annually
• Both measures expected to remain lower than September levels

Technical Factors:

November's weakness resulted from late-month price sampling during peak holiday discounting, artificially depressing reported price levels. Wells Fargo expects this distortion to reverse in December, though some effects may linger. The analysts noted tariff-related price pressures are easing.

Sector Breakdown:

• Goods prices: Expected to drive the rebound due to holiday markdown timing
• Services inflation: Anticipated to firm, particularly in travel-related categories
• Shelter inflation: Will lag due to CPI's six-month housing panel rotation; payback not expected until April
• Insurance: Health insurance showed steep November declines with further drops anticipated; motor vehicle insurance may rise modestly in December before resuming declines in early 2026

Market Implications:

Despite the monthly acceleration, the continued downward trend in year-over-year figures suggests underlying inflation pressures continue easing. This data will be crucial for Federal Reserve policy decisions.

The Bureau of Labor Statistics will release the December CPI report on January 13 at 8:30am ET.