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The latest data on U.S. inflation, based on the Consumer Price Index (CPI), sends a clear message: U.S. inflation has resumed its decline after months of stabilization. However, the Fed’s January inflation target remains at 0.2%, which has not yet been achieved
oneU.S. inflation, as measured by the Consumer Price Index, is not far from that target:
• Headline inflation rate is 2.4%
• Core inflation at 2.5%, the lowest since March 2021
But there’s another inflation measure that’s more eye-catching: the decline in real-time inflation measures since late last year. Truflation is a real-time inflation measurement service that is increasingly respected by the high-end financial community. The service uses blockchain technology as a ledger to ensure the integrity of the data collected. Real-time inflation (i.e. actual inflation) has dropped to below 0.1%.
Truflation is known to be constructed several months ahead of official inflation as measured by the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). Under this circumstance, can the official CPI be expected to drop below 2% in 2026? The answer is probably yes, let’s see why.
The first explanation is due to the structural lag in the housing component of the CPI index. Housing makes up about a third of the Consumer Price Index (CPI) inflation basket, and its main component (equivalent to landlords’ rent) changes in the quarters following a reversal in the real housing market. However, private rent data shows that inflation has fallen significantly since the end of 2025, with real rents stagnating or even falling slightly in many major US cities. This dynamic is already reflected in Truflation, while the official Consumer Price Index (CPI) continues to reflect previous increases.
Second, the supply chain has fully returned to normal, and competition in commodity trade has increased. Prices for durable goods, electronics, furniture and many everyday consumer goods are trending downward or rising very slowly. Again, Truflation captures these adjustments almost immediately, while CPI based on monthly surveys and moving averages largely smooths these movements.
Third, there are obvious signs of slowdown in domestic demand. Falling credit, sluggish discretionary consumption and rising precautionary savings are all putting deflationary pressure on prices of services other than housing. This trend is consistent with the downward trend recorded by Truflation since late 2025.
Historically, during periods of rapid deflation, the inflation index lags the official CPI by 6-12 months. If this pattern repeats itself, the official CPI may continue to gradually approach the 2% area in the first half of 2026, and the possibility of temporarily falling below this level in the second half is not small, especially if the decline in housing inflation is fully reflected in official statistics.
The bottom line is that the current divergence does not indicate an “error” in the CPI, but rather a delay in the statistical transmission of the data. Truflation is an advanced indicator of price dynamics, while CPI remains a slower institutional indicator. If the observed trends are confirmed in real time, the probability of a CPI decline approaching or even exceeding the 2% level in 2026 will be high, which would make…
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