Economic & Financial Consulting Firm in Chicago, Illinois

One Good Month, but Too Soon to Call a Trend

Peter Bernstein, Chief Economist pbernstein@rcfecon.com, 312-431-1540 x1515
Louise Collis, Senior Economist

February 13, 2026

The Current Situation

The CPI All Items rose 0.2% in January; year-on-year inflation fell to 2.4%. Core CPI, which does not include food and energy categories, increased 0.3% for the month and 2.5% for the year. There were many good signs in the numbers this month, such as lower inflation for housing, food and energy, but other measures of inflation are still flat.

The Producer Price Index, which has often been a leading indicator of consumer prices, showed an increase in December, rising 0.5% from November to December. The inflation measure preferred by the Federal Reserve when considering interest rate changes, the Personal Consumption Expenditures (PCE) index, has not been published since the November numbers. It then showed a year-on-year increase of 2.8%, above the Fed’s 2% goal.

Figure with CPI All Items, PCE deflator and PPI Final Demand, showing that all three have been flat for the last two years, and that all three are above the target rate of 2%.

While January’s CPI numbers were good, they come with a key caveat. The absence of historical data due to the government shutdown makes it harder to assess recent trends. To that point, the annualized six-month inflation rate (July to January) is 2.8%, notably higher than the year-over-year measure. That’s why we’d like to see a few more low inflation months to call it a trend.

RCF’s Inflation Scorecard

RCF’s Inflation Scorecard is based on analysis of 20 different price series comprising 98% of the total consumer price index. Each of these price series represents a portion of the CPI based on household spending patterns. For example, food purchased for at-home consumption is about 8% of the typical consumer’s budget; it has a weight of 8.04 out of a total index of 100.

Our scorecard presents two metrics to track month-to-month price increases. The first metric is the share of the index for which inflation in the most recent month is rising (greater than the prior month’s inflation) vs. the share of the index for which inflation is falling (lower than the prior month) or prices fell (deflation). For November, in the absence of most October prices, we judged inflation to be rising if the price rise September to November converted to a monthly figure was greater than the change August to September.

RCF Inflation Scorecard: January 2026

Figure with falling, stable, and increasing inflation, showing that in January, a 17% share of goods and services had rising inflation, and 27% had inflation above the Fed's target.

Our first metric shows that 64% of the weighted CPI had falling inflation in January vs December. Another 14% of the weighted CPI saw prices fall in January (deflation). Together 78% of the weighted CPI showed lower inflation or deflation in January. Seventeen percent (17%) of the weighted CPI showed rising inflation in January.

Our second metric shows that only 27% of the weighted CPI has monthly inflation above 0.2%, a monthly figure that corresponds to the Fed’s annual target of 2% inflation. This is the lowest share since we began tracking, but combined with the very high value in December, it is more an indicator of instability than a trend. That said, our deeper dive into the January data confirms that it was one of the better data points we have seen in quite a while.

Analysis of Individual Components of the Consumer Price Index

Table with year-on-year and month-on-month inflation for 20 components of the CPI, making up 98% of the total index.

Sources: Bureau of Labor Statistics and RCF Calculations 1. Inflation direction indicates whether monthly inflation in January was higher or lower than monthly inflation in December. Deflation means prices fell in January vs December. Prices for Motor Vehicle Insurance were not reported for November.

Highlights:

Food at home prices rose 0.2%, driven mainly by meats, poultry and fish, which are up 0.7% for the month and up 7% for the year. Food away from home rose just 0.1%, but up 4% for the year.
Owners’ equivalent rent and rent of primary residence are both up 0.2% in January. Values have been flipping between 0.2% and 0.3%, and the unrounded value for rent of 0.249% shows why. Lodging away from home is down 0.1% since December and down 1.9% for the year.
Motor fuel prices fell 3.2% for the month and are down 7.3% from a year ago. Household energy is flat for the month, and up 6.6% from a year ago. Taken together, energy is down 0.3% for the year.
New vehicles are up 0.1% in January, while used cars and trucks are down 1.8%. Motor vehicle insurance prices rose 0.5% for the year and are down 0.4% since December.
Medical care and recreation are both above target inflation, but both improved over last month, up 0.3% and 0.5% respectively. Public transportation/airfares are up 4% in January and were up 3.2% in December.