Inflation is slowing. Try telling that to to the landlord

A fresh inflation report from the Bureau of Labor Statistics brought some good news Friday, with the January Consumer Price Index coming in at 2.4%, a shade below estimates of 2.5%. That’s a number to suggest that Federal Reserve policy, which has led to three interest rates cuts over the last six months, is helping to moderate the stubborn inflation that has plagued consumers since the aftermath of the pandemic.

However, it’s not all good news. Strip out food and energy — the data points that tend to move around the most — and core inflation is still running somewhat hot at 2.5%.

Here's what to know.

The rent is too damn high

The problem? Shelter costs, which rose 3.0% over the year and accounted for most of January's monthly rise. Rents and mortgage payments remain stubbornly high, and year over year, they increased at a pace above other costs like groceries and gas.

The CPI report suggests, in all, that inflation is indeed “cooling” slowly — as financial news coverage inevitably phrases it — hewing closer to the Fed’s 2% target. But the inflation that’s left is arguably the most persistent kind, which tends to show up in the cost of housing, plus everyday consumer services like home internet.

Some nice-to-have items rose particularly sharply, with airfares climbing 6.5% over December’s numbers. The price of “personal care” also spiked on a month-over-month and year-over-year basis, climbing 5.4% between January 2025 and January 2026. That means consumers are paying more for manicures, at the barber shop, and in the toothpaste aisle.

The brightest spot in the new report is falling energy prices, including gas prices down 7.5% year-over-year. That will come as no surprise if you've noticed, lately, that you seem to be paying less at the pump. And in theory, falling gas prices should make consumers feel good, providing some everyday uplift. But when rent keeps climbing, that effect is likely to be muted.

Shelter costs are both hard to reach and deeply felt

Economists generally consider housing to be the stickiest, most stubborn piece of the inflation puzzle — which is one reason it accounts for some 35% of the overall CPI. While consumers can cut back on takeout and Ubers, housing is the opposite of discretionary or even flexible.

It’s also hard to reach from a policy standpoint, in the sense that monetary policy can’t build apartments. Fed policy affects borrowing costs across the board. Still, housing builds and rents happen considerably down the line of such inputs. Thus, housing costs can drag significantly even when inflation eases elsewhere.

In short, household budgets might be benefitting in some areas, but American consumers are likely still feeling as if inflation is tough. Essentially: A $50 fill-up at the local BP is nice, but when you're staring down yet another rent increase, that's the line item to weigh on your mind.