US CPI Inflation Cools to 2.8% YoY as Shelter Costs Finally Moderate

Headline US consumer price inflation slowed to 2.8% year-over-year last month—beating consensus forecasts of 3.0%—while core CPI edged down to 3.0%. On a monthly basis, prices rose just 0.2%, marking the gentlest pace in more than a year.

Relief inside the basket

Crucially for Federal Reserve policymakers, shelter inflation decelerated to 0.2% month-on-month, its slowest print since 2021. Used vehicle prices dipped 1.1%, and core goods remained mildly deflationary, offsetting modest energy firmness.

Immediately following the release, two-year Treasury yields shed 8 basis points to 3.82%, while the dollar weakened across major G10 peers.

Policy implications

Vizyon Capital's US Economics Desk sees the report as clearing the runway for gradual policy normalization into early 2026, targeting a terminal fed funds range of 3.50%–3.75%. Lower rate volatility remains a powerful tailwind for credit spreads and emerging-market assets.