Based on current macro regime conditions and core cpi (ex food/energy)'s historical behaviour in similar regimes, the model projects 340.78 by 2026-12-31 ( +1.4% from 336.07 today). The 68% confidence range is 339.55 to 342.01; the wider 95% range is 338.37 to 343.19. Methodology below the headline.
Core CPI (ex Food/Energy) Forecast 2026
Quantitative analysis from 297 observations of Core CPI (ex Food/Energy) history, joined to four universal macro regime classifications. Numbers are computed, not narrated.
Performance by Window[02]
| WINDOW | N | ANN RET | ANN VOL | RET/VOL | HIT % | TOTAL |
|---|---|---|---|---|---|---|
| 1Y | 12 | 2.82% | 0.21% | 13.50 | 100.0% | 2.82% |
| 3Y | 35 | 3.00% | 0.29% | 10.28 | 100.0% | 9.02% |
| 5Y | 60 | 4.06% | 0.55% | 7.44 | 100.0% | 22.02% |
Forecast Approach
regime implied: The current macro regime classification (Goldilocks, Reflation, Stagflation, or Deflation) dictates the expected direction and magnitude of movement, calibrated against historical regime performance.
Consensus source: Cleveland Fed nowcast and breakeven inflation
Key Drivers & Risks
- •Energy prices
- •Shelter costs
- •Wage growth
- •Supply chains
- •Monetary policy
Historical Volatility
Low-moderate: 1-3% annual range under normal conditions
How Core CPI Forecasts Have Held Up Historically
Core CPI (excluding food and energy) has a better track record than headline because the volatile components are stripped out. Forecasters have still missed turning points: the 2021-2022 acceleration from 1.6% to 6.6% (September 2022 peak) was under-predicted by every major bank; the 2023-2024 disinflation from peak to 3.2% was correctly captured on direction.
Regime-conditional models on core CPI achieve approximately 65% directional accuracy. The print is highly persistent month-over-month, which makes mean-reversion forecasts work better than turning-point forecasts.
Regime Sensitivity for Core CPI
Core CPI is a slow-moving regime variable. Trends persist for multiple quarters before shifting. Goldilocks regimes anchor core CPI in 2-2.5% range; stagflation maps to 4%+; deflation maps to sub-1%.
The April 2026 setup has core CPI at 2.6% (down from peak but still above 2% target). The supercore measure (services ex-shelter, the Fed's most-watched metric) is at approximately 4%, materially above target. The gap between core CPI and supercore captures the disinflation challenge: shelter is mean-reverting while supercore services prices are sticky.
What Drives Core CPI Forecast Errors
Three structural issues drive core CPI forecast errors. First, supercore services (services ex-shelter) is dominated by wages plus services-margin dynamics. Wage growth above 4% (currently 4.0% on Atlanta Fed Wage Tracker) is inconsistent with 2% inflation; the regime model captures the level but not the persistence. Persistent supercore prints near 4% are the dominant reason core CPI has been stuck above 2.5% since mid-2024 despite shelter normalization.
Second, shelter mean-reversion timing is uncertain. The OER methodology lag means shelter inflation continues falling even after market rents stabilize, which creates a mechanical disinflation that ends abruptly when the lag normalizes. The 2024-2025 shelter glide path was relatively smooth; the next leg (2026 onward) depends on whether market rents have re-accelerated, which the BLS print won't capture for another 12-18 months.
Frequently Asked Questions
What factors could push Core CPI (ex Food/Energy) higher?▾
The primary drivers that tend to lift Core CPI (ex Food/Energy) depend on the current macro regime. Inflation erodes purchasing power and forces central banks to tighten, squeezing equity multiples and increasing credit stress. Breakeven rates reveal what the bond market expects for future inflation, while CPI and PCE measure what consumers actually experience. Divergences between market expectations and realized prints create some of the highest-impact trading events of the year. Convex tracks these drivers live across the Inflation category and flags when multiple forces align in the same direction. See the "Key Drivers & Risks" section on this page for the current list, and check the regime dashboard for how the macro backdrop is currently tilted.
What factors could push Core CPI (ex Food/Energy) lower?▾
The same transmission channels that drive Core CPI (ex Food/Energy) higher operate in reverse when conditions flip. The risk drivers listed above map directly to scenarios that, if triggered, would pull this metric in the opposite direction. Convex aggregates these into a scenario-weighted probability distribution rather than a point forecast, so the magnitude depends on which scenarios activate.
Where does consensus see Core CPI (ex Food/Energy) heading?▾
Rather than publish a point target that goes stale the day after release, Convex assembles consensus from the macro regime classification, active scenario probabilities, and historical base rates. Point forecasts from banks and strategists are worth reading for context, but they typically cluster around the consensus and miss the tail events that actually move markets. The scenario-weighted approach here captures that tail risk explicitly.
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Forecasts are model-based projections derived from current regime classification, scenario probabilities, and historical patterns. They are not investment advice. All investments involve risk.