Recent readings on consumer and wholesale inflation show that prices in the United States remain persistent. The data suggest Federal Reserve officials are unlikely to cut interest rates in the near term. Economists and policymakers are closely analyzing the numbers to forecast how inflation might evolve through 2026 and how it will influence monetary policy. The Labor Department reported that wholesale prices, which track inflation before it reaches consumers, rose 3% in November and 2.8% in October. The report combined the two months because a government shutdown delayed its release. Energy price increases contributed significantly, but even after adjusting for volatile food, energy, and trade services, wholesale prices increased 3.5% over 12 months, matching the largest 12-month rise since March. Despite high headline figures, the Producer Price Index showed that core wholesale inflation, excluding volatile items, remained more moderate. Economists note that revisions to September data partly explain the spike. Stephen Brown, deputy chief North America economist at Capital Economics, said tariff effects were limited. Core personal consumption goods PPI rose 0.5% in September and October, then fell 0.1% in November. Consumer inflation also remained sticky in December 2025. The core Consumer Price Index, which excludes food and energy, measured 2.6%, slightly below the expected 2.7%. This level was unchanged from September through November and remains above the Fed’s 2% target. Brown estimates that the Fed’s preferred inflation measure, the core Personal Consumption Expenditures index, could rise to 3% in 2026, up from 2.8% over the previous three months. The Fed’s Beige Book, a report summarizing conditions across its 12 districts, noted that tariffs continued to pressure prices. Companies that absorbed tariff-related costs are increasingly passing them to customers, though some sectors, like retail and restaurants, have resisted. Businesses anticipate some moderation in price growth but expect overall costs to stay elevated for now. Philadelphia Fed President Anna Paulson said tariff-driven price increases mostly affect goods rather than services, and she expects inflation to moderate to the Fed’s 2% target by the second half of 2026. She projects that only modest adjustments to interest rates will be needed later in the year if the job market stabilizes. Fed Governor Stephen Miran expects disinflation in services and shelter to offset higher goods prices. He predicts up to 150 basis points of rate cuts this year, exceeding the median Fed estimate of a single 25-point reduction. Miran attributes the potential for lower rates to a reduced neutral rate due to slower population growth. He said the factors driving goods inflation remain uncertain but may include lingering pandemic effects and global trade developments. Minneapolis Fed President Neel Kashkari said inflation appears to be slowing, but timing and pace remain uncertain. He noted that while housing inflation is trending down, goods and services prices will determine overall trends. Kashkari cautioned that the Fed’s primary tool—interest rates—must balance inflation control with economic support. Aggressive cuts could worsen price pressures, even if they help the labor market. Despite inflation challenges, Kashkari sees the economy as resilient. Strong consumer spending and investment in AI are expected to continue driving growth. The Fed is anticipated to maintain rates at 3.5%-3.75% at its January policy meeting, following three rate cuts in the fall of 2025.