Stable 2.7% YoY, Hot Underneath: December CPI Packs Food +0.7%, Shelter +0.4%, Airfares +5.2%

The Bureau of Labor Statistics’ press release dated January 13, 2026, leans on the comfort of a steady 2.7% YoY headline inflation rate. But December didn’t feel steady: consumers absorbed food +0.7% MoM, shelter +0.4% MoM, a record recreation +1.2% MoM, and airline fares +5.2% MoM—even as “core” rose just 0.2% MoM thanks to deep discounts in goods and a steep drop in communication prices.

Here’s what the data reveals from the January 13, 2026 release:

• Headline CPI held at 2.7% YoY, “the same increase as over the 12 months ending November,” while December posted +0.3% MoM (seasonally adjusted) and 0.0% MoM (not seasonally adjusted)—a reminder that seasonal factors drove the monthly headline.

• Core CPI rose +0.2% MoM, but that calm relied on declines in communication (-1.9%), used cars (-1.1%), and household furnishings (-0.5%); service-side pressure persisted: shelter +0.4%, medical care +0.4%, apparel +0.6%.

• Energy’s “+0.3%” headline hides the household pain: gasoline -0.5% vs utility (piped) gas +4.4% and energy services +1.0%.

• Services stepped on the gas: recreation +1.2% (largest 1-month increase on record) and airline fares +5.2%—both squarely inside core.

• Data gap warning: Seasonally adjusted figures for October–November 2025 are absent due to the appropriations lapse, limiting continuity and any read on fall momentum.

The Stability Mirage: Flat YoY, But December Ran Hot Where It Hurts

A stable 2.7% YoY headline makes for tidy messaging, but the December internals say otherwise. Households faced simultaneous increases across staples and services:

• Food +0.7% MoM and +3.1% YoY, with both food at home +0.7% MoM and food away from home +0.7% MoM. Dining out remains sticky at +4.1% YoY.

• Shelter +0.4% MoM and +3.2% YoY, still the largest single driver of the monthly increase.

• Recreation +1.2% MoM, a record monthly move, nudging core services higher.

• Airline fares +5.2% MoM, a jolt that rarely shows up with this magnitude without demand or capacity friction behind it.

This is the anatomy of a “steady” headline concealing fresh heat in consumer-facing categories. It’s not a contradiction; it’s the difference between the rearview mirror (YoY) and what’s happening now (MoM).

Core’s Calm Is Borrowed from Goods Discounts

Core inflation’s +0.2% MoM owes more to selective declines than broad disinflation:

• Offsets did the heavy lifting: communication -1.9%, used cars -1.1%, household furnishings -0.5%.

• Services pressure persisted: shelter +0.4%, medical care +0.4%, apparel +0.6%, and services less energy services +0.3% MoM (still +3.0% YoY).

The release acknowledges the declines but stops short of linking them explicitly to the subdued core print. That link matters. If the goods discounts and communication drop prove transient, core can re-accelerate on services alone.

Selected December components:

Energy’s Shell Game: Gasoline Down, Utilities Up

Energy posted +0.3% MoM, but households felt the opposite of relief:

• Gasoline -0.5% MoM and -3.4% YoY delivered pump relief.

• Home energy costs climbed: utility (piped) gas +4.4% MoM and +10.8% YoY; energy services +1.0% MoM and +7.7% YoY. Electricity dipped -0.1% MoM but remains +6.7% YoY.

The aggregation masks wallet reality: winter utilities are biting even as gas is cheaper. That imbalance matters for consumption mix—more budget to heat the house, less for discretionary categories, with uneven effects across retailers and services.

Seasonal Math and the Missing Months

Two technical footnotes shape December’s story:

• Seasonal adjustment did heavy lifting: the CPI-U was unchanged NSA, yet +0.3% SA. Seasonals didn’t fabricate strength—they normalized it—but they do explain why December looked firmer on paper than at the register.

• October–November 2025 are missing in the seasonally adjusted historical table. That gap weakens trend inference and revision tracking. We can compare September to December, but we can’t observe whether fall momentum was cooling, stabilizing, or re-accelerating during the lapse.

September vs. December: Same Headline, Hotter Services

Top-line inflation looks steady, but the mix shifted toward hotter services—precisely the place policymakers watch for persistence.

What This Means for Markets

• Rates and Fed rhetoric: The combination of sticky services (services less energy services +0.3% MoM, +3.0% YoY) and shelter +0.4% MoM complicates a clean “disinflation accomplished” narrative. The core +0.2% MoM is welcome but conditional on goods and communication discounts that may not repeat. Expect policymakers to lean on “data dependent,” with next PCE details and January CPI seasonals carrying outsized weight for rate-cut timing.

• Curves and breakevens: With energy utilities hot and gasoline soft, breakevens may hold a modest bid on services stickiness, while front-end rates should stay sensitive to any reversal in goods disinflation. A modest bull steepening bias holds if growth wobbles and services calm; otherwise, range trading persists.

• Equities:

• Credit: Sticky services inflation plus flat YoY headline keep the Fed patient. That’s supportive for carry, but lower-tier consumer credit remains vulnerable if utility and shelter pressures persist into late winter.

• Commodities: The utility gas +4.4% MoM surge underscores winter volatility. Watch regional gas balances and power load. If utilities stay elevated while gasoline softens, consumption tilts away from travel/leisure in Q1.

Looking Ahead: Signals That Will Set the Tone

• Services breadth: Track whether recreation’s +1.2% MoM record and airfares +5.2% retrace. A quick reversal would validate core’s +0.2%; persistence would not.

• Shelter glide path: +0.4% MoM is still too firm for comfort. Any deceleration here materially lowers core.

• Goods disinflation durability: Another month of used cars -1.1% and communication -1.9%-type declines would entrench core relief; a snapback would push underlying prints higher.

• Seasonal fade: With NSA 0.0% vs SA +0.3% in December, January’s seasonal profile could flip the optics. Don’t over-index to one month’s adjusted number without the unadjusted context.

• Filling the data gap: As the October–November SA series are restored, revisions could tweak the fall trajectory. Be ready for backward-looking adjustments that reframe the narrative.

The Investor Takeaway

• Positioning:

• Risk management:

The headline says “unchanged at 2.7%.” The tape says December ran hotter where consumers live: food, shelter, recreation, and travel. For now, core looks tame because discounts did the heavy lifting. If those fade before shelter cools, the market will have to reprice that calm.