Two-Month Mirage: Dec 18 CPI Says +0.2% While Utilities Run Hot at +6–9% YoY

The Bureau of Labor Statistics’ December 18, 2025 release leans on a tidy headline—consumer prices up 0.2% over the two months from September to November—but the story underneath is anything but tidy. Behind the aggregation are missing monthly details, a gasoline whipsaw (October -2.1%, November +3.0%), and a utilities complex that’s still running far above the headline: electricity +6.9% YoY, natural gas +9.1% YoY, fuel oil +11.3% YoY.

• Headline CPI-U rose 0.2% over the two months from September to November; year-over-year inflation cooled to 2.7% in November (from 3.0% in September).

• Core CPI (less food and energy) rose 0.2% over two months, with +2.6% YoY in November.

• Energy increased 1.1% over two months; food increased 0.1% over two months.

• A methodology change—removal of long-term care insurance from the health insurance index—takes effect “with this release,” complicating medical-care comparability just as medical-care inflation is running +2.9% YoY (medical care services +3.3% YoY).

• October CPI survey collection did not occur due to a funding lapse; November collection resumed mid-month, yielding a partial sample. Some categories with nonsurvey sources (e.g., gasoline) show monthly values for October and November; most others do not.

Here’s what the data reveals:

• The two-month framing obscures material October–November volatility, especially in energy and vehicles.

• Headline cooling to 2.7% YoY coexists with persistent pressure in utilities and shelter (+3.0% YoY)—not a broad-based slowdown.

• Core services remain sticky at +3.0% YoY, despite a tame two-month core print.

• Used cars and trucks re-firmed to +3.6% YoY, with positive monthly prints in October (+0.7%) and November (+0.3%).

• A structural change to the health insurance index arrives precisely when medical care is reaccelerating, muddying the signal.

The Two-Month Framing: Smoother Optics, Rougher Reality

When most seasonally adjusted monthly series are missing, “two months” reads like prudence. In practice, it blurs the picture at the very moment volatility matters.

• Gasoline fell -2.1% in October, then jumped +3.0% in November. Roll that into two-month math and you smooth out a price swing consumers actually felt at the pump.

• Vehicles also turned—used cars and trucks +0.7% (Oct), +0.3% (Nov)—after contracting earlier in the year; that’s now +3.6% YoY in November.

• With October survey data not collected and November’s survey partial, category comparability is uneven. Some categories were backfilled (gas), most were not. That mix makes cross-bucket inference shaky.

The broader pattern from May–September is clear enough—monthly CPI at 0.1%–0.4%, core mostly 0.2%–0.3%—but recasting October–November as a single +0.2% step mutes dispersion just as the cycle got interesting.

Utilities: The Inflation Households Actually Pay

Headline YoY cooled to 2.7%, but essential household energy is moving the wrong way:

• Energy overall: +4.2% YoY

• Electricity: +6.9% YoY

• Utility (piped) gas service: +9.1% YoY

• Fuel oil: +11.3% YoY

This matters for both inflation psychology and real cash flows. Utilities are quasi-regulated with lagged pass-throughs; once tariffs and riders reset, they’re sticky. Heading into winter, the gap between headline disinflation and utility bills is a wedge that can preserve services inflation, pinch discretionary spend, and complicate the “all clear” narrative.

Household operations aren’t helping: household furnishings and operations +4.6% YoY—not a crisis, but not cooling either.

Core Services: Softer Rhetoric, Stubborn Reality

The release emphasizes a tame core: +0.2% over two months, +2.6% YoY. But the bedrock drivers of core services are still firm:

• Services less energy services: +3.0% YoY

• Shelter: +3.0% YoY

• Medical care services: +3.3% YoY (with total medical care +2.9% YoY)

On top of that, BLS removed long-term care insurance from the health insurance index “effective with this release.” Without quantification, historical comparisons get murky exactly when the category turns. Investors shouldn’t over-interpret a clean deceleration in medical; the underlying signal is noisier than usual.

Cars and Food: Turnarounds Hiding in Plain Sight

The Auto Re-Firm

Used vehicles flipped from mid-year declines to positive monthly prints in October and November, culminating in +3.6% YoY by November. New vehicles have stabilized to modest gains (+0.1% Oct, +0.2% Nov). Auto-sensitive categories (lenders, dealers, auction platforms, parts) are seeing firmer pricing than the headline implies.

Restaurant Inflation Is Still a Thing

Food at home is contained (+1.9% YoY), with dispersion—meats/poultry/fish/eggs +4.7%, nonalcoholic beverages +4.3%, dairy -1.6%, fruits & vegetables +0.1%. But out-of-home is still sticky:

• Food away from home: +3.7% YoY

• Full-service meals: +4.3% YoY

• Limited-service: +3.0% YoY

Two-month “food +0.1%” sounds benign, but the bill at the table still climbs.

Narrative vs Numbers

Data Quality Watchouts That Matter for Investors

• October survey gap; partial November sample from Nov 14 onward. Mixed sourcing (backfilled gasoline, missing others) risks cross-category distortion right when the release pivots to a two-month frame.

• Seasonal adjustment revisions arrive in February and will revise the prior five years—2025’s monthly path will shift.

• CPI-U and CPI-W are final at release; Chained CPI (C-CPI-U) YoY +2.6% is preliminary and subject to revision.

• Methodology change (health insurance index) introduces a break just as medical care services +3.3% YoY—a poor moment to assume clean deceleration.

What This Means for Markets

• Rates and duration: The 2.7% YoY headline cools the tape, but core services at 3.0% YoY and utilities at +6–9% YoY argue against an unimpeded disinflation glide path. Favor moderate duration overreach in the belly rather than the long end; steepening bias remains attractive if growth cools but services stay sticky.

• Breakevens and TIPS: Headline softness vs utility firmness sets up a near-term tug-of-war. Maintain balanced TIPS exposure; fade aggressive downside in breakevens until utilities roll over or shelter decelerates more convincingly.

• Equities—defensives vs cyclicals:

• Commodities and energy: The gasoline whipsaw telegraphs volatility rather than trend. Utilities strength nods to winter nat-gas risk; consider tactical exposure with tight risk controls rather than structural longs.

• What to watch next:

The headline cooled and the optics were tidy. The data weren’t. Until utilities stop running hot, shelter eases more decisively, and core services relent, the disinflation victory lap is premature.

The investor takeaway: respect the 2.7% headline, but position for a bumpier path. Lean into belly duration over long, keep balanced TIPS exposure, favor utilities with regulatory pass-through, stay selective in restaurants, and use autos’ reflation tactically. The numbers you don’t see in the two-month summary are the ones that will move your P&L.