In December 2025, the Consumer Price Index showed a 0.3% month-over-month and 2.7% year-over-year increase, indicating ongoing price rises. Neel Mukherjee predicts that high inflation will persist in 2026 due to economic activity and tariff pass-through to consumers, especially affecting lower-income households.

Mukherjee anticipates a challenging financial year for consumers in 2026, with elevated prices causing stress for lower-income households. He suggests that high prices of everyday goods and utility costs, along with a tough hiring environment, could lead to more cautious spending from this group.

Despite the inflation challenges, early-year tax refunds may offer temporary financial relief. Mukherjee hints at possible government intervention to address affordability concerns, with potential tariff rate stabilization and even reductions, leading to relief in prices of imported goods.

One positive outlook for 2026 is in the housing market, where Mukherjee expects the Federal Reserve to cut rates by 25 to 50 basis points, potentially lowering mortgage rates. This could enhance housing affordability, driving refinancings and sales in the market.

While inflation will likely persist, strategic policy changes and rate cuts could provide some relief. Staying informed and maintaining a budget will be crucial for navigating the financial landscape in 2026.

Read more at Yahoo Finance: Here’s What Lies Ahead for Inflation and Affordability in 2026