Core Inflation Statistics in US 2025 | Key Facts

Core Inflation in US 2025

Understanding core inflation in the United States during 2025 has become increasingly critical for economists, policymakers, and everyday Americans navigating the economic landscape. Core inflation, which excludes volatile food and energy prices, provides a clearer picture of underlying inflationary pressures in the economy. Throughout 2025, the Federal Reserve and financial analysts have closely monitored core inflation trends to gauge the effectiveness of monetary policy and predict future economic conditions. The measurement primarily focuses on the Core Consumer Price Index (Core CPI) and the Core Personal Consumption Expenditures (Core PCE) price index, both calculated and reported by official U.S. government agencies.

The year 2025 has presented unique challenges in measuring and understanding core inflation dynamics. The 43-day federal government shutdown from October 1 to November 12, 2025, disrupted data collection by the Bureau of Labor Statistics, resulting in missing October data and incomplete November figures. Despite these obstacles, available statistics reveal that core inflation in the US in 2025 has shown a gradual declining trend from earlier peaks, though it remains above the Federal Reserve’s 2.0 percent target. The most recent verified data indicates that core CPI inflation stood at 2.6 percent year-over-year as of November 2025, marking the lowest level in nearly five years since March 2021. As government officials have noted, this achievement represents measurable economic progress, with the data demonstrating significant improvement from the elevated levels seen in 2023 and early 2024, when core inflation consistently exceeded 3 percent.

Interesting Facts About Core Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics Consumer Price Index Reports, U.S. Bureau of Economic Analysis Personal Income and Outlays Reports, Federal Reserve Economic Data (FRED), December 2025

The data presented above reveals several compelling insights about core inflation dynamics in the United States during 2025. Most notably, the 2.6 percent core CPI rate in November 2025 represents the lowest reading since March 2021, demonstrating meaningful progress in the Federal Reserve’s inflation-fighting efforts. However, this figure still exceeds the central bank’s 2.0 percent long-term target, indicating that additional monetary policy adjustments may be necessary. The core PCE inflation rate of 2.8 percent in September 2025 shows the Federal Reserve’s preferred inflation gauge remains elevated, though it has declined from the 2.9 percent recorded in August 2025.

Examining the components reveals that shelter costs increased 3.0 percent annually in November 2025, contributing substantially to overall core inflation due to housing’s significant weight in the CPI basket. The medical care services inflation of 3.3 percent reflects ongoing healthcare cost pressures, while used cars and trucks inflation at 3.6 percent demonstrates continued strength in the automotive sector. Interestingly, core goods inflation measured just 1.4 percent, the lowest since pandemic-era disruptions, suggesting that supply chain normalization and reduced demand for physical goods have helped moderate price pressures in this category. The household furnishings and operations category showed 4.6 percent inflation, representing one of the higher rates among core components, while new vehicles inflation remained modest at 0.6 percent, reflecting manufacturer incentives and improved supply availability.

Core CPI Monthly Inflation Rate in the US 2025

Data Source: U.S. Bureau of Labor Statistics Consumer Price Index Summary Reports, November 2025 Release (December 18, 2025)

The monthly core CPI inflation data for the US in 2025 demonstrates the gradual deceleration in underlying price pressures throughout the year. From July through September 2025, core CPI maintained a 3.1 percent annual rate before declining to 3.0 percent in September and further dropping to 2.6 percent by November 2025. The month-over-month changes show that core inflation increased 0.3 percent in both July and August 2025, before moderating to 0.2 percent in September. Due to the federal government shutdown, the Bureau of Labor Statistics was unable to collect data for October 2025, leading to a combined two-month measurement from September to November showing 0.2 percent growth.

This deceleration pattern reflects several important economic developments. The declining trend from 3.1 percent to 2.6 percent over just a few months represents significant progress toward the Federal Reserve’s target, though the pace remains slower than policymakers would prefer. The monthly figures indicate that price pressures have become more subdued, with the September through November period showing an annualized rate closer to the 2.0 percent target. The headline CPI inflation of 2.7 percent in November 2025, compared to core CPI of 2.6 percent, demonstrates that volatile food and energy prices contributed marginally more to overall inflation than core components during this period. This convergence between headline and core measures suggests broader stabilization across the economy, though economists note that shelter costs continue exerting upward pressure on the core index.

Core Inflation Components Breakdown in the US 2025

Data Source: U.S. Bureau of Labor Statistics Consumer Price Index Detailed Report, November 2025; Federal Reserve Economic Data

The core inflation components in the US during 2025 reveal substantial variation across different categories, highlighting the complexity of inflationary pressures. Shelter costs at 3.0 percent annual inflation represent the single largest contributor to core CPI, accounting for approximately 36 percent of the total CPI weight. Within shelter, owners’ equivalent rent carries approximately 24 percent weight while rent of primary residence accounts for roughly 8 percent. The decline from 3.6 percent shelter inflation in September to 3.0 percent in November 2025 marks meaningful progress, though housing costs remain elevated above pre-pandemic levels of approximately 3.3 percent annually.

Medical care services inflation of 3.3 percent continues to exceed the overall core inflation rate, reflecting ongoing healthcare cost pressures including hospital services, physician fees, and insurance premiums. Meanwhile, medical care commodities inflation of just 1.1 percent suggests that prescription drug and medical equipment prices have stabilized. The used cars and trucks category at 3.6 percent inflation shows moderation from the 5.1 percent rate in September 2025, as the automotive market continues normalizing after pandemic-era supply disruptions. In contrast, new vehicles inflation of 0.6 percent remains subdued due to improved inventory availability and manufacturer incentives. The household furnishings and operations inflation rate of 4.6 percent represents one of the higher readings among core components, while apparel inflation at just 0.2 percent demonstrates price stability in the clothing sector. The core goods inflation of 1.4 percent and core services inflation exceeding 4.0 percent illustrate that services prices continue driving overall core inflation more than goods prices.

Shelter and Housing Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics Consumer Price Index November 2025 Report, Federal Reserve Bank Research Papers

Shelter inflation in the US during 2025 has been a critical driver of overall core inflation, contributing approximately two-thirds of the total core CPI increase throughout much of the year. The 3.0 percent annual increase in November 2025 represents substantial progress from the 3.6 percent rate in September, yet shelter costs remain well above the Federal Reserve’s comfort zone. Housing comprises approximately 36 percent of the total CPI basket and an even larger share when calculating core CPI, making shelter dynamics essential to understanding inflation trajectories. The 0.2 percent increase from September to November 2025 on a monthly basis suggests that housing cost pressures are gradually moderating.

The composition of shelter inflation reveals important nuances. Owners’ equivalent rent (OER), which measures what homeowners estimate they could charge to rent their property, accounts for roughly 24 percent of total CPI weight and represents the largest single component. Rent of primary residence, measuring actual rental payments, contributes approximately 8 percent of total CPI. Both measures lag behind market rents due to the structure of lease agreements and measurement methodologies. Research from Federal Reserve banks indicates that market rent growth has normalized to pre-pandemic levels, but this normalization takes approximately 18 to 24 months to fully filter through to CPI shelter measures. The lodging away from home category decreased during the September to November 2025 period, providing some offset to primary residence costs. Economists project that shelter inflation should continue declining through 2026 as market rent normalization completes its pass-through to official statistics, potentially bringing shelter costs closer to the historical 3.3 percent annual average observed from 2016 to 2019.

Medical Care and Healthcare Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics Consumer Price Index Medical Care Component, November 2025

Medical care inflation in the US during 2025 has shown mixed trends, with the overall medical care index increasing 2.9 percent year-over-year in November 2025, down from 3.3 percent in September 2025. This deceleration brings healthcare inflation closer to overall core CPI rates, though specific components continue experiencing elevated price pressures. Medical care services inflation remained at 3.3 percent annually in November 2025, reflecting persistent cost increases for hospital care, physician visits, and health insurance premiums. Industry research indicates that commercial healthcare costs for employer-sponsored plans are projected to grow by approximately 8.0 to 8.5 percent in 2025 and 2026, substantially higher than the CPI medical care measure due to differences in methodology and coverage.

The relatively modest medical care commodities inflation of 1.1 percent in November 2025 suggests that prescription drug prices and medical equipment costs have stabilized compared to services. However, this masks significant variations within pharmaceuticals, particularly with GLP-1 weight-loss and diabetes medications driving substantial cost increases for health plans. Hospital services continue facing inflationary pressures due to rising labor costs, with healthcare worker wages increasing faster than national averages. Many hospitals reported operating margins of approximately 2.1 percent in 2024, down from 7.0 percent in 2019, forcing them to seek higher reimbursement rates from commercial insurers. The medical care category’s 7 percent weight in total CPI means that healthcare inflation contributes meaningfully to overall price stability objectives. Looking ahead, new medical technologies, pharmaceutical advancements, and continued labor market tightness in healthcare are expected to keep medical care inflation above the general 2.0 percent target throughout the remainder of 2025 and into 2026.

Goods and Services Core Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics Detailed CPI Components, November 2025; Federal Reserve Economic Analysis

The divergence between goods and services inflation in the US during 2025 represents one of the most significant dynamics in core inflation analysis. Core goods inflation of 1.4 percent in November 2025, which excludes volatile food and energy items, demonstrates the substantial progress made in moderating physical goods prices following pandemic-era supply chain disruptions. This represents the lowest core goods inflation rate since March 2021 and reflects improved global supply chains, reduced shipping costs, and normalized consumer demand patterns. The household furnishings and operations category at 4.6 percent inflation stands as an outlier within goods, while apparel inflation of just 0.2 percent shows intense retail competition and efficient import markets keeping clothing prices stable.

In contrast, core services inflation excluding housing continues running above 4.0 percent annually, significantly exceeding the Federal Reserve’s 2.0 percent target. This elevated services inflation primarily reflects tight labor markets and wage pressures, as service sector businesses are labor-intensive with wages comprising 60 to 83 percent of costs depending on the industry. Motor vehicle insurance, previously showing 4.7 percent annual inflation, remains elevated due to increased vehicle repair costs and higher claim frequencies. Transportation services have moderated from earlier peaks but continue contributing to services inflation. Recreation services inflation of 1.8 percent shows that discretionary spending categories have seen more moderate price increases. The persistence of high services inflation represents a key challenge for Federal Reserve policymakers, as services prices tend to be stickier and more closely tied to wage growth than goods prices. Economic research from Federal Reserve banks suggests that non-housing core services inflation may need to decline substantially to achieve overall 2.0 percent core inflation, requiring continued labor market cooling and wage moderation through 2025 and into 2026.

Transportation and Automotive Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics Transportation CPI, Bureau of Transportation Statistics, November 2025

Transportation inflation in the US during 2025 has moderated significantly from pandemic-era peaks, with the overall transportation index increasing just 1.6 percent year-over-year in November 2025. Despite this modest overall rate, transportation contributed 9.7 percent to the total 2.7 percent CPI increase, reflecting the category’s substantial weight in consumer spending. Used cars and trucks inflation of 3.6 percent represents the largest contributor within transportation, accounting for 3.1 percent of the total change in overall CPI. This marks substantial deceleration from the 6.0 percent rate in August 2025, as the used vehicle market continues normalizing after extreme pandemic-era price volatility.

The used vehicle market experienced unprecedented disruptions during 2020-2022, with prices surging 46.6 percent in 2021 and 14.2 percent in 2020 according to Cox Automotive’s Manheim Used Vehicle Value Index. Following declines of 7 percent in 2023 and 0.4 percent in 2024, wholesale prices are expected to rise approximately 1.4 percent in 2025, representing a return to more normal market conditions. However, retail prices tracked by the CPI have not declined as quickly as wholesale prices, creating a lag in consumer relief. New vehicles inflation of 0.6 percent remains subdued as manufacturers have improved production capacity and increased incentives to clear inventory. Motor vehicle insurance continues experiencing elevated inflation due to rising repair costs, increased frequency of accidents post-pandemic, and higher replacement costs for vehicles. Motor vehicle maintenance and repair services also show above-average inflation due to labor costs and parts prices. While motor fuel (gasoline) showed -0.5 percent deflation in September 2025 compared to year-ago levels, this category is excluded from core inflation measures due to its volatility. The overall moderation in transportation inflation represents meaningful progress, though continued monitoring of used vehicle prices and insurance costs remains essential for policymakers assessing core inflation trends.

Food and Energy Impact on Core Inflation in the US 2025

Data Source: U.S. Bureau of Labor Statistics CPI November 2025, U.S. Department of Agriculture Economic Research Service

While food and energy are excluded from core inflation calculations, their price movements significantly impact household budgets and consumer sentiment throughout 2025. Food prices increased 2.6 percent year-over-year in November 2025, decelerating from 3.1 percent in September, providing some relief to consumers. Within food, groceries (food at home) rose 1.9 percent annually while restaurant meals (food away from home) increased 3.7 percent, reflecting higher labor costs in the food service industry. Specific categories show extreme variation, with beef and veal prices surging 14.7 percent due to cattle supply reaching the lowest levels since the early 1950s, while coffee prices rose approximately 19 percent driven by adverse weather in major producing countries and trade policies.

Energy costs increased 4.2 percent year-over-year in November 2025, up from 2.8 percent in September, representing acceleration rather than moderation. Gasoline prices rose 0.9 percent annually after showing -0.5 percent deflation in September, reflecting volatile global oil markets. Fuel oil prices soared 11.3 percent, particularly impacting Northeast households during heating season, while natural gas increased 9.1 percent. These energy price pressures contributed to the divergence between headline CPI at 2.7 percent and core CPI at 2.6 percent in November 2025. The exclusion of food and energy from core measures reflects their historical volatility and susceptibility to temporary supply shocks rather than underlying inflationary trends. However, persistent food and energy inflation can influence wage demands and inflation expectations, potentially feeding back into core inflation. The Federal Reserve monitors both measures, using core inflation to guide policy while recognizing that headline inflation directly affects consumer purchasing power. Throughout 2025, the relative stability of core inflation compared to headline fluctuations has validated the Fed’s focus on underlying price pressures rather than temporary commodity shocks.

Federal Reserve Policy and Core Inflation Targets in the US 2025

Data Source: Federal Reserve Board FOMC Meeting Minutes and Projections, Federal Reserve Economic Data, December 2025

The Federal Reserve’s approach to core inflation in 2025 centers on achieving the 2.0 percent long-run target while maintaining maximum employment. The central bank’s preferred measure, the core Personal Consumption Expenditures (PCE) price index, stood at 2.8 percent year-over-year in September 2025, down from 2.9 percent in August but still 0.8 percentage points above target. The core CPI at 2.6 percent in November 2025 shows similar dynamics, as CPI typically runs slightly higher than PCE due to methodological differences and coverage. Federal Reserve officials have indicated that while progress has been made, inflation remains “somewhat elevated” and requires continued attention through monetary policy.

FOMC meeting projections from September and December 2025 show committee members expecting gradual convergence toward the 2.0 percent target through 2026, though projections vary among participants. The central bank has maintained elevated interest rates throughout most of 2025 to ensure inflation returns to target sustainably. Market expectations in late 2025 suggest potential rate cuts may begin, supported by the declining trend in core inflation and signs of labor market cooling. However, Fed officials emphasize a data-dependent approach, meaning future policy actions will respond to incoming economic indicators rather than following a predetermined path. The persistence of elevated shelter inflation and services price pressures presents challenges to achieving the 2.0 percent target, as these components tend to adjust slowly. Federal Reserve research indicates that achieving 2.0 percent core PCE inflation may require shelter inflation declining to approximately 2 percent and non-housing core services inflation moderating by 0.3 to 0.4 percentage points from current levels. The balance between controlling inflation and maintaining employment growth—the Fed’s dual mandate—guides policy decisions, with officials monitoring both price stability and labor market conditions when determining appropriate interest rate levels throughout 2025 and beyond.

Core Inflation Measurement Methodologies in the US 2025

Data Source: U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis, Federal Reserve Banks Methodology Documentation

Understanding core inflation measurement methodologies in the US during 2025 is essential for interpreting economic data accurately. The Core Consumer Price Index (Core CPI), calculated monthly by the Bureau of Labor Statistics, excludes food and energy prices to provide a clearer view of underlying inflation trends. The Bureau collects approximately 80,000 prices monthly from about 23,000 retail establishments and 50,000 housing units across 75 urban areas, representing roughly 93 percent of the U.S. population. The CPI uses a fixed basket approach with periodic updates to expenditure weights, currently based on 2021-2022 consumer spending patterns.

The Core Personal Consumption Expenditures (Core PCE) price index, calculated by the Bureau of Economic Analysis, serves as the Federal Reserve’s preferred inflation gauge. While both exclude food and energy, Core PCE typically registers 0.3 to 0.5 percentage points lower than Core CPI due to methodological differences. PCE uses a chain-weighted approach that accounts for consumer substitution between goods more dynamically than CPI’s fixed basket. The PCE also covers a broader range of expenditures and uses different weights, particularly giving lower weight to housing and medical care compared to CPI. Alternative measures like Median CPI and Trimmed-Mean CPI, developed by the Federal Reserve Bank of Cleveland, provide additional perspectives by excluding statistical outliers rather than specific categories. Sticky Price CPI, tracked by the Federal Reserve Bank of Atlanta, focuses on goods and services with infrequent price changes, capturing persistent inflation trends.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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