Inflation Regimes · monthly refresh

Core CPI Above 3%

Underlying inflation pressure persists

Core CPI (All Items Less Food and Energy) above 3% represents persistent underlying inflation that cannot be dismissed as transitory energy or food price spikes. This was the regime from March 2021 through late 2024.

ALAN INTELLIGENCE

ALAN INTELLIGENCE · alanglobalintelligence.com

ALAN IntelligenceData as of 2026-08-30

Every historical instance, overlaid — S&P 500 forward path from the event

Each instance (n=6)Median path25th-75th percentileCurrent: 2025

Median forward returns by horizon

Bars: median S&P 500 forward return. Whiskers: 25th-75th percentile. n = 6 occurrences.

Based on 6 historical occurrences. Last triggered: 2025-07-01.

Past performance is not indicative of future results. This material is for informational and educational purposes only and does not constitute investment advice, an offer to buy or sell any security, or a recommendation. Data from publicly available sources believed to be reliable but not guaranteed. All investments involve risk, including possible loss of principal.

alanglobalintelligence.com

ALAN GLOBAL INTELLIGENCE · alanglobalintelligence.comSource: FRED CPILFESL · Generated 2026-08-30

Historical occurrencesshowing 6 of 6

Date	1M return	1Y return	5Y return
1966-08-01	-7.8%	+15.9%	+22.5%
1972-08-01	+2.0%	-1.8%	-8.6%
1994-09-01	-2.4%	+18.8%	+179.8%
1995-10-02	-0.0%	+18.1%	+145.2%
2021-05-03	+0.4%	-0.9%	+76.5%
2025-07-01	+2.3%	+20.7%	—

What history says

Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.

Core inflation is what the market actually cares about

Headline CPI can spike on oil (which is transitory). Core CPI reflects demand-pull and wage-push inflation that requires policy response. The market trades on core, not headline.

3% core CPI is a 'too hot for comfort' threshold

At 3% core CPI, the Fed is at least 100bp above target. This guarantees hawkish rhetoric and removes the possibility of preemptive rate cuts even if growth slows.

Shelter inflation is the dominant component and lags by 12 months

Shelter (rent + owners' equivalent rent) is ~33% of CPI and lags market rents by 12 months. When asking rent growth peaked in mid-2022, it took until mid-2024 to flow into CPI. This lag creates a known future path for inflation.

For your portfolio

Sticky core inflation rewards patience over reaction. Because shelter costs feed the index with a roughly 12-month lag, part of the disinflation path is knowable in advance — consider extending bond duration gradually along that path rather than all at once on a single encouraging print.

More Inflation Regimes charts

CPI Inflation Above 4%

High-inflation regime and asset allocation

Core PCE Above 3%

The Fed's preferred inflation measure runs hot

CPI Returns to 2% Target

Inflation normalized — what changes

Core Inflation Crosses 4% — When Price Pressure Becomes Embedded

S&P 500 returns after core CPI exceeds 4% year over year

Inflation Crosses 3% — Above the Fed's Comfort Zone

S&P 500 returns after headline CPI exceeds 3% year over year

Inflation Crosses 5% — Entering a Hot-Inflation Regime

S&P 500 returns after headline CPI exceeds 5% year over year

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For information and research only. Not investment advice. ALAN does not place trades or execute orders. Figures come from the sources shown and can lag the market; verify independently before making decisions. Past performance is not predictive of future results.

Date

1M return

1Y return

5Y return

1966-08-01

-7.8%

+15.9%

+22.5%

1972-08-01

+2.0%

-1.8%

-8.6%

1994-09-01

-2.4%

+18.8%

+179.8%

1995-10-02

-0.0%

+18.1%

+145.2%

2021-05-03

+0.4%

-0.9%

+76.5%

2025-07-01

+2.3%

+20.7%

—