Inflation Bounces Back as Economy Slows, Pre‑War Shock Looms

The first month of 2026 saw a modest rise in consumer prices, according to the Federal Reserve’s favored measure. Prices went up by 0. 3 percent from December, and when compared to last year the jump was 2. 8 percent. Even after removing food and energy, core inflation hit 0. 4 percent monthly and 3. 1 percent yearly – a full point above the Fed’s goal of 2 percent. Growth, measured by GDP adjusted for inflation, was also trimmed. The final three months of 2025 now show a 0. 7 percent annual pace, lower than earlier estimates suggested. These numbers were released just before a sudden spike in oil prices triggered by the conflict with Iran. The timing raises concerns that inflation could accelerate further as global markets react to the war.The story of rising prices is not new. After a peak of over 9 percent in 2022, inflation eased to near the Fed’s target by 2024. But since 2025 it has begun to climb again, especially in goods that have felt the weight of tariffs. Some of those trade barriers were overturned by the Supreme Court, yet others remain, forcing businesses to decide whether to absorb higher costs or pass them on to shoppers. Overall, the data paint a picture of an economy that is slowing while prices keep moving up. Policymakers face the challenge of stabilizing inflation without stifling growth, all while navigating a volatile geopolitical landscape.