Inflation is retreating from most of the store — why your biggest bills are the holdouts: Chart of the Day
Inflation is retreating from most of the store — why your biggest bills are the holdouts: Chart of the Day
Jared BlikreSun, October 18, 2026 at 11:33 AM UTC
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Inflation is reaching fewer corners of the economy. That doesn't mean life is getting cheaper.
Inflation is reaching fewer corners of the economy. That doesn't mean life is getting cheaper.
Only about 38% of the roughly 175 categories in the Consumer Price Index rose faster than a 3% annual pace over the past six months, according to Yahoo Finance calculations from Bureau of Labor Statistics (BLS) data. That's down from 56% in May and the fewest since spring 2025.
The count borrows a test from Fed Chairman Kevin Warsh, who laid it out at Jackson Hole in August. He counts how many categories in the Fed's preferred PCE price gauge are rising faster than 3%, a gauge of how widespread inflation is. The Fed's goal is still 2%.
"Too many categories are still posting increases above 3% on both a six- and 12-month basis," Warsh said after the Fed raised rates in September.
By that yardstick, September looked better than its hotter-than-expected headline. The 12-month count slipped to about 47% from 51% in August. At the 2022 peak, about 4 in 5 categories topped 3%. In the two decades before the pandemic, about 1 in 3 typically did.
A narrower spread strengthens the case for waiting, and traders have leaned that way. The bond market put the odds of a hike at the Oct. 27-28 meeting at about 17% by Friday's close, according to Bloomberg data — down from roughly 33% after Wednesday's CPI report. Warsh declined to preview his next move in remarks Friday before the International Monetary Fund.
Some Fed officials want more evidence before moving. Chicago Fed President Austan Goolsbee called September's inflation report discouraging but told Yahoo Finance's Jennifer Schonberger he favors waiting before acting again. "We need to get more data," he said.
The holdout categories are the expensive ones
Electricity, rent, hospital services, and car repairs have all been rising faster than 3% over the past six months, after adjusting for seasonal swings. Gasoline is up about 34% from a year ago. Together, the categories still above the line make up at least 60% of the CPI basket, which the BLS weights by how much households spend on each item.
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Groceries show the other side of the problem. Grocery prices rose less than 2% over the past year, yet they're still up nearly a third since December 2019. Electricity is up 43% over the same stretch.
Slower inflation means prices rise more slowly. It doesn't bring them back down, and the Fed has no intention of returning to 2019 prices.
Not everyone sees progress. "There is little evidence of a cooling or a broad-based disinflationary impulse," RSM chief economist Joe Brusuelas wrote Wednesday, pointing to trade, energy, and AI as sources of stubborn price pressure. He expects another quarter-point hike in December.
The bond market leans his way on the longer view. Traders still price in about one full quarter-point increase by the Dec. 9 meeting and nearly three by September 2027.
The next test arrives Oct. 29, when September PCE inflation is released, one day after the Fed decides. Next month's CPI report follows. If the six-month count holds below 40%, the case for waiting gets stronger. A return to 50% or more — near where it sat for most of the first half of the year — would put a hike back on the table.
Watch rent and electricity. Until they cool, a shrinking count won't feel like relief.
Internal AI tools helped analyze interview transcripts, research, and draft this post. Humans reviewed, edited, and fact-checked this post before publication.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
Source: “AOL Money”
