Monthly Inflation Brief
The Reality Index rose 4.38% year over year in June 2026, running 84 basis points hotter than the BLS headline CPI print of 3.53%. Since 1980, the Reality Index has risen 5.34× against CPI’s 4.05× — a cumulative gap of 31.8%.
The Reality Index — a fixed-weight measure of the prices American households actually pay across ten categories of everyday spending — rose 4.38% in June 2026 compared with June 2025. The BLS Consumer Price Index for All Urban Consumers (CPI-U), unadjusted, rose 3.53% over the same period. Below, what moved and why.
The remaining categories — groceries (+2.75%), dining out (+3.37%), discretionary (+2.83%), education (+2.51%), pets (+2.70%) — printed in the low-to-mid single digits.
The clearest split — used cars
The government’s quality-adjusted used-car index and the prices buyers actually met at auction sat about 4 percentage points apart this month. The official index marks vehicle prices down for the added equipment of newer model years (a hedonic adjustment); Manheim records what the metal sold for. Manheim measures wholesale values, which lead the retail prices households eventually pay — a forward signal, not a one-month quirk. A category where the official index and the transaction record diverge is exactly what the Reality Index exists to surface.
The Reality Index runs structurally ahead of CPI because it prices the categories the official measure understates — fixed-weight tenure housing, health care from what employers and families actually spend, and vehicles at transaction value. This month the gap was 84 basis points. When the dominant mover is energy, which both indices track closely, the two converge; when it is housing, health, or vehicles, the Reality Index pulls ahead.
Since 1980, the Reality Index has risen 5.34× against CPI’s 4.05×. As of June 2026 that is a cumulative gap of 31.8% — the distance between the official benchmark and what a fixed 2000 basket of everyday household costs has actually done since 1980. This figure reflects two 2026 methodology updates — transportation rebuilt on transaction prices, and the basket moved from 1980 to 2000 weights; see the methodology note.
Methodology notes
Weights. The Reality Index holds a fixed 2000 expenditure basket constant across all years — a Laspeyres index — with the price level anchored to 1980 = 100. The 2000 basket weights categories closer to modern household spending than the 1980 basket used in earlier editions; it measures the cost of that same basket over time rather than reweighting each year.
Housing. The housing bucket is tenure-weighted (roughly 65% owner / 35% renter). The renter portion is refreshed via Zillow ZORI using the latest available reading (May 2026 for this edition); the owner side is carried from the 2025 annual baseline. The full owner-cost model is at realityindex.co/housing.html.
Health care. Reflects the KFF Employer Health Benefits Survey, published annually each fall, carried forward between releases.
Education. Priced at published (sticker) tuition.
Transportation. A dedicated Reality Index composite: used vehicles at Manheim auction values, new vehicles at Kelley Blue Book transaction prices, gasoline at the BLS average pump price, and insurance, maintenance, public transit and parts from the matching CPI subindices. Because the official index applies hedonic quality adjustments to vehicles that transaction prices do not, transportation diverges from CPI on its own data rather than tracking it — and, extended across the full 1980–2025 history, it widens the cumulative gap.