Image Source: Pexels
 

Except for declines in gasoline and used cars, this was not a good report.
 

The CPI Rose 0.3 Percent in December
 

The BLS reports the CPI Rose 0.3 Percent in December, in line with the Bloomberg Econoday consensus.

The BLS reports to a single decimal place. I calculate two decimal places.

CPI Month-Over-Month Percent Details
 

• All Items: 0.31
• All Items Except food and Energy: 0.24
• Food and Beverage: 0.67
• Food Away from Home: 0.69
• Food at Home: 0.72
• Shelter: 0.40
• Owners’ Equivalent Rent (OER): 0.31
• Rent of Primary Residence: 0.26
• Medical Care Services: 0.40
• Medical Care Commodities: 0.33
• Energy: 0.30
• Gasoline: -0.45
• Used Cars and trucks: -1.1 (Rounded to 1 Place)
• New Vehicles: 0.0 (Rounded to 1 Place)

CPI Year-Over-Year Percent Change
 

CPI year-over-year details from the BLS, chart by Mish.

CPI Year-Over-Year Details

 

• CPI: 2.7 percent
• Core CPI (Less Food and Energy): 2.6 percent
• Food and Beverages: 3.0 percent
• Food at Home: 2.4 percent
• Food Away from Home: 4.1 percent
• Owners’ Equivalent Rent (OER): 3.4 percent
• Rent of Primary Residence: 2.9 percent
• Shelter: 3.2 percent
• Medical Care Services: 3.5 percent
• Medical Care Commodities: 1.5 percent
• Energy Services: 7.7 percent
• Energy Commodities: -3.0 percent
• Gasoline: -3.4 percent

Impact of Shelter
 

Shelter is typically the primary factor in the CPI barring wild swings in energy because shelter is over 35 percent of the CPI.

Year-over-year shelter is up 3.2 percent.

CPI Month-Over-Month Rent and OER
 

CPI Month-over-month Rent and OER data from the BLS, chart by Mish

CPI Indexes
 

Trump says “Inflation is nonexistent. It’s a hoax.”

But that chart explains in one image why people are angry.

Blaming everything on Biden does not work because Trump promised to fix this.

CPI Weights
 

CPI Percentage weights as of November 2025

Nearly 3/4ths of the CPI consists of inelastic items.

OER, Owners’ Equivalent Rent is the single largest component of the CPI with a current weight of 26.36 percent.

Rent of primary residence has a weight of 7.49 percent.

Key CPI Issues
 

While everyone rails against BLS data collection methods and procedures (with good cause), that is not the fundamental problem.

Rather, the fundamental problem is the makeup of the CPI and PCE itself.

The CPI consists of items directly paid for by consumers. The PCE (the Fed’s preferred measure of inflation) contains items indirectly paid for by consumers, notable Medicare and corporate health insurance.

They are both flawed because neither includes home owners’ insurance or property taxes.

I expect big jumps in medical care services starting next month when health care premiums jump.

Nonsensical BLS Chart
 

The BLS says the cost of homeowners insurance index has risen form 151 to 165 since January of 2020.

That’s an increase of 9.3 percent. But all the BLS counts is insurance for contents, not fire, flood, or hurricane damage to the building.

Let’s now discuss food.

BLS Percentage Weights November 2025
 

• Food at Home: 7.97
• Food Away from Home: 5.68

USDA Actual Spending Weights 
 

• Food at Home: 5.68
• Food Away from Home: 8.01

Note the BLS food weights for home vs away are reversed from where people actually spend their money.

For more details, please consider Where Do You Spend Money on Food? How Screwed Up Are the BLS Weights?

Does the BLS match your budget?

The Key Mistake
 

Finally, please consider Is Homeowners Insurance Understated in the CPI? Shop Around! This is the key BLS mistake.

Our Insurance went up by $2,000. Then another $2,000. Here’s our story.

But look on the bright side, Trump Says There Is ‘Virtually No Inflation.’

Homeowners’ insurance, and property taxes, and food are three reasons the CPI is garbage.

Better collection mechanisms will not and cannot fix this fundamental problem.

Worse yet, the Fed, Trump, and the overwhelming majority of economists do no even understand the problem.

But hooray! The CPI was tame. I made a note.

Economists need to make a note that wages are not keeping up with inflation because the measures are ridiculous.

Looking Ahead
 

I expect big jumps in medical care services.

There are 24 million people on ACA, and a majority of them are in Republican states.

For Obamacare discussion, please see my December 7, 2025 post How Much Will 4.5 Million Florida Residents Pay for Obamacare in 2026?

Here’s some interesting health care math on Obamacare in Florida.

What About Overall Health Care Costs?
 

Good question. I addressed that issue on December 8, 2025 in Health Care Inflation Bomb Makes the Fed’s 2 Percent Target Almost Impossible

Let’s discuss 2026 health care premiums and what they mean to the Fed’s preferred measure of inflation.

I project increases in health care will add 1.4 to 1.6 percentage points to headline PCE inflation before food, energy, shelter, or tariffs move prices at all.

And it’s the PCE, not the CPI that will have the Fed’s attention.

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