Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.
 

Note: Unlike the BLS CPI, the BEA does not publish PCE percentage weights monthly and the changes are more dynamic. Those are estimates based off consumers expenditures.

Recent Estimates, Goldman and Zillow, Per Grok

• Goldman Sachs (Dec 2025 update): PCE housing inflation (which includes shelter) expected to slow to 2.1% YoY by December 2026 (from ~3.4% YoY in Dec 2025). Monthly pace: ~0.16% m/m by end-2026. They cite rapid multifamily supply, rising vacancies, and subdued new lease growth as reasons shelter’s contribution to core PCE shrinks to ~0.4 ppt by end-2026 (vs. ~0.7 ppt recently). This aligns with broader core PCE cooling to ~2.1%.
• Zillow Research (Dec 2025 CPI forecast update):
  • Owner’s Equivalent Rent (OER, major CPI shelter component): +2.9% over 2026 (half-point slowdown from 2025’s ~3.4-3.35%).
  • Rent of Primary Residence: +2.0% over 2026 (full-point slowdown from 2025).
  • Multifamily/apartment rents: Essentially flat nationally (~+0.3% in 2026), with single-family rents up ~2.3%. Exceptions like NYC could see acceleration due to shortages.

Potential Discrepancy

If we assume a 10 percent rise in health care and a generous 2 percent decline in shelter, the net impact on the PCE would be 1.7 health care minus 0.32 = +1.38 percentage points.

For the CPI, a 10 percent rise in health care and a generous 2 percent decline in shelter, would net 0.678 health care minus 0.677 for shelter (rent + OER) resulting in a wash but only for the BLS.

Although ACA is not as important as Medicare plus corporate plans, inaction could add another 0.3 to 0.5 percentage points to the PCE.

This is a tough estimate because over a million dropped out and many others switched to bronze plans.

We are looking at a setup where difference between the CPI and PCE may be as high as 2.2 percentage points.

This estimate assumes Congress will not do something about Obamacare premiums. There are compromises in the Senate, but Trump recent said he may veto them. Momentum has also stalled.

Perhaps this is due to the fact that only 1.5 million or so have dropped out. But more are likely to do so over the course of the year. Plus many are switching to Bronze plans.

Regardless, despite the surge in support for a compromise, it now appears I got this wrong in the end.

KFF estimates Obamacare (ACA) premiums will rise about 26 percent if Trump signs a bill and 114 percent if not.

Timing of 2026 Health Care Impacts

• CPI: Based on 2026 projections, significant increases in health insurance premiums due to expiring tax credits will likely hit the CPI in a spread-out manner rather than all at once, owing to the Bureau of Labor Statistics (BLS) calculation methodology. While consumer “rate shock” is expected to be immediate upon policy renewal, the CPI, which measures the “retained earnings” of insurers, uses a smoothed, 2-year moving average updated semi-annually. 
• PCE: The PCE directly tracks premiums. When premiums jump on January 1st, that new, higher cost will be reflected in the January PCE data (usually released in late February/early March).

Timing issues will cause an immediate to perhaps a 3-month phase-in to PCE for corporate plans. The CPI will be extremely lagging.

Year-over-year discrepancies between the CPI and PCE rate to be huge.

We will find out within a month whether this view is accurate.

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