US INFLATION: More Residual Seasonality In Store For CPI (1/2)

The following is taken from the MNI US CPI Preview, which can be found in full here. 

• January is always an important month for CPI inflation as it begins to capture start-of-year price resets.
• Historically about 20% of net price increases for the core basket over the year come in January and sometimes close to another 20% in February. This share dropped significantly in 2021 and 2022, when price increases where more spread out across the year in a period of high inflation, but we have seen some normalization since with Jan 2025 ultimately accounting for 21.6% of 2025 price increases.
• Seasonal adjustment processes have struggled with these swings in pricing behavior and appear to have helped see “residual seasonality” in the inflation data where the adjustment process doesn’t fully eradicate early year strength.
• We suspect that should be less of a factor this year compared to last year’s January release but it’s still likely at play and is noted by various analysts. Expect any modest upside surprises to be flagged in this light.