This is headline CPI excluding Shelter inflation YoY.

Why am I excluding Shelter?

Because it's the:

• Largest component in the CPI (33%)

• Laggiest component in the CPI (8-12 months behind)

By excluding it, we can evaluate how the other 67% of components are experiencing price changes & get a grasp on Non-Shelter dynamics.

Additionally, the Fed can't control Shelter prices.

We know that for a fact.

So why is this so important?

The All Items ex-Shelter inflation rate is +2.4% YoY.

It's only slightly higher than the Fed's target of +2% YoY.

But here's the tricky part.

This inflation rate was +1.35% in April 2025.

So, the inflation rate has nearly doubled within a year.

The other critical thing to realize is this...

Headline & Core CPI have been decelerating YoY for awhile now... but this datapoint isn't...

So that means one thing and one thing only.

All of the disinflation that we're seeing at the headline & core CPI level is being entirely driven by the disinflation in Shelter, which is the laggiest and most detached datapoint within the CPI calculation.

Also, see that arrow?

That was Liberation Day.

Are tariffs the culprit for this entire reacceleration?

Of course not!

Inflation is multi-variate.

It's caused by deficit spending, monetary policy, lending activity, credit expansion, demand pulls, cost pushes, wage growth, and many many many other things.

This post isn't a statement on tariffs at all.

I'm just pointing out the fact that dynamics in Shelter are having an outsized impact on Headline & Core inflation metrics, which provides an unfair representation of actual inflation dynamics that Americans are feeling on a day-to-day basis.

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