The January reset of health insurance premiums captured in the PPI has been sequentially revised up to 4.3% m/m nsa in the latest vintage from 2.2% initially. More upward revisions are still possible. Core inflation at the beginning of 2026 was hotter than first reported.

If BEA sticks with CPI for legal services in Mar (asymmetric intervention) core PCE inflation % y/y will be biased down by roughly a tenth. If they switch to PPI again in Mar (symmetric intervention), core PCE inflation will still be 0.03pp lower than if they had not intervened at all.

If BEA is going to engage in selective outlier control, it should be even handed, the methodology should be disclosed in advance and any interventions should be disclosed with the release of the data.

If the January spike in CPI legal services does not reverse in March or at some point this year, then BEA was wrong to censor it in January and core PCE inflation should be revised higher at the time of the benchmark.

If March data show a large decline in CPI legal services (confirming the January spike was noise), BEA *should* switch back to the PPI legal services index in March otherwise they will introduce a downward bias to core PCE inflation.

A lot of CPI components, including legal services, are sampled bimonthly which means noise in a given month sometimes takes two months to reverse.

The decision to revert back to CPI as the source data for PCE legal services in Feb raises questions and may be problematic in Mar.

Troubling development--Core PCE inflation was hot in Jan at 0.36% m/m & 3.1% y/y BUT it would have been even hotter had BEA not shifted its source data in an ad hoc fashion to avoid showing an 11.9% m/m rise in legal fees shown in the CPI. The BEA acknowledged they made this choice...not a good look