When I read the CPI report, I don’t stop at 2.7% year over year. I try to figure out where inflation still has oxygen and where it’s clearly running out. One footnote matters…October CPI wasn’t collected because of the funding lapse, so we’re leaning on a two month Sept to Nov move with some gaps in the usual monthly detail. Even with that caveat, the signal is clear that headline CPI is 2.7% YoY, core is 2.6% YoY, and the pattern is familiar…cooling into spring, a mid year reacceleration, and now a renewed slowdown.

The Sticky Part Is Mostly Shelter And It’s Lagging Reality

Shelter is still doing a lot of heavy lifting at 3.0% YoY, and OER 3.4% YoY with an outsized contribution to the total. But here’s the key context people miss…private sector rent data is cooling much faster than CPI shelter. Zillow’s observed rent growth for apartments is around 1.1% YoY, and their multifamily outlook is negative in 2026 (-0.3%). That’s not a contradiction, it’s how the data is built. CPI shelter is slow because it reflects existing leases that reset over time. Private data captures today’s asking rents. So CPI is still showing shelter inflation because it’s looking in the rearview mirror, even as the real time housing market is already easing.

Where The Weakness Is Showing Up

The soft spots aren’t subtle. Travel linked categories normally resilient when demand is strong are outright negative year over year…lodging away from home (-4.1%), airline fares (-5.4%), public transportation (-4.0%). That’s what fading pricing power looks like. And goods are still a competitive battlefield…information technology commodities (-3.3%) and smartphones (-9.4%) are basically telling you nobody gets to raise prices there.

Meanwhile, the inflation that is hanging around looks more like cost structure than overheating demand. Energy services are up 7.4% YoY, with electricity 6.9% YoY, even though energy commodities are much tamer (1.2% YoY). That’s less consumers are splurging and more the fixed bills are still heavy.

My Read

This isn’t an economy reaccelerating. It’s an economy cooling in an uneven way…sticky, lagging shelter and non optional bills on one side, weakening discretionary pricing power on the other. If you sanity check it against real time signals, it lines up, WTI hanging in the mid $50s and trending down over the year doesn’t scream demand resurgence. The bigger implication is timing with the CPI still being propped up by backward looking shelter, while the forward looking parts of the economy are already acting softer. That’s how you end up with policy staying tight even after the underlying demand has rolled over.