Inflation in focus: Unpacking the latest CPI report

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Feb 20, 2026

Mike Hanson, a senior economist known for macro and inflation analysis, unpacks January CPI readings and why inflation might hover near 3% in 2026. He discusses energy and food price dynamics. He examines tariffs and their slow pass-through to durable goods. He covers housing, rents and how CPI versus PCE differences could shape Fed decisions.

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INSIGHT

Core Goods Showing Unusual Strength

Core goods inflation is unusually positive, reflecting tariff effects and slower disinflation.
Vehicle prices masked broader strength: non-auto core goods rose notably and are up over 2% year-over-year.

ADVICE

Factor Tariff Pass-Through Into Planning

Expect further tariff pass-through and factor it into inflation and pricing decisions this year.
Prepare for core CPI run rates to move back above 3% for a period.

INSIGHT

Dollar Moves Have Limited Pass-Through

A weaker dollar raises import costs but pass-through to U.S. inflation is muted because many imports are invoiced in dollars.
Roughly a 10% trade-weighted depreciation boosts inflation by about 0.1–0.2 percentage points historically.

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In this episode of J.P. Morgan’s Making Sense, Phoebe White, a senior U.S. rates strategist and head of U.S. inflation strategy, sits down with senior economist Mike Hanson to unpack the January CPI report and the inflation outlook for 2026. They discuss why inflation may hover near 3% this year, the impact of tariffs, the gradual cooling in rents, and how differences between the CPI and PCE could inform the Fed’s path. The conversation also touches on energy and food prices, data quality concerns at the BLS and much more.

This episode was recorded on February 18, 2026.

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