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  • Inflation Finally Played Nice, Now Here Is How To Take The W

Inflation Finally Played Nice, Now Here Is How To Take The W

Author

Noah Zelvis
February 22, 2026

January’s inflation print was the kind of report markets love: headline CPI cooled to 2.4% and core held at 2.5%, with gasoline and used vehicles doing some of the heavy lifting.

That is real progress, and it buys the economy time.

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The setup is cleaner than it was a few months ago. Annual inflation slowed, month-over-month CPI rose a manageable 0.2%, and the worst-case tariff inflation spiral is not showing up in the headline numbers yet. That lowers the odds of a policy shock.

But it is not an all-clear signal. The same report showed pockets of stubborn price pressure, especially in tariff-touched goods like appliances and furniture, plus services that refuse to chill, like hospital care and airline tickets. The opportunity for investors is not to argue whether inflation is solved. It is to position for a world where inflation is improving, but uneven, and the Fed still wants more proof before it starts cutting again.

Still, the internals matter:

  • Energy relief is real. Lower gasoline prices help households immediately and can improve sentiment faster than any chart.

  • Goods inflation is trying to reassert itself. Computers, appliances, furniture, and new cars popped in January, which looks like retailers testing how much tariff-linked cost they can push through.

  • Services remain sticky. Hospital care and other service categories rose at a faster clip, and those tend to cool slowly because they track wages, capacity, and demand more than commodity inputs.

  • Housing was contained in January, but that does not mean the job is done. Shelter trends will still be a key gate for any sustained downshift.

So what does that mean for positioning?

It is a regime where the Fed can stay patient. Inflation is better, not beaten. That typically produces a market that rewards companies with either (1) pricing power that does not break demand, (2) structural growth that is less rate-sensitive, or (3) direct sensitivity to even the hint of future easing.

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Actionable Stuff

  • Treat this as a disinflation trend, not a victory lap. The next few prints matter more than one good month.

  • Play the split screen. Use energy relief as a tailwind for consumers, while respecting that services inflation can keep rates higher for longer.

  • Look for pricing power in the right places. Staples and essential services can pass through costs more cleanly than discretionary names.

  • Be selective in goods exposure. Tariff-pressured categories can swing from margin squeeze to margin recovery depending on who wins the pricing battle.

  • Position for optionality. If cuts resume later, you want exposure that benefits, without needing the Fed to move next month.

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Top Picks

Cardinal Health (NYSE: CAH)

If services inflation is sticky, healthcare spending is the kind that rarely takes a meaningful break.
Cardinal sits in the supply chain that hospitals and providers rely on every day, which makes it less sensitive to the consumer mood and more tied to steady utilization.

In a world where hospital care costs keep rising, the plumbing layer of healthcare tends to stay busy, and scale players can defend margins through efficiency and contract structure.

What to watch: Segment margin trends, commentary on hospital demand, and any updates on cost inflation in the supply chain.

Boot Barn (NYSE: BOOT)
This is a smarter consumer play for a weird inflation mix. When gas prices ease, discretionary breathing room improves at the margin, but shoppers still stay value-aware.

Boot Barn sells workwear and western apparel that often behaves more like practical gear than fashion, with demand supported by trades, energy regions, and replacement cycles.

If goods prices rise in categories like appliances, consumers will trade down elsewhere, and durable, utility-driven retail can hold up better than trend-driven brands.

What to watch: Same-store sales, ticket size versus traffic, and gross margin trends as promotions shift.

Becamex IDC (NYSE: IIPR)

If the Fed is not rushing to cut, yield-sensitive pockets can still work when fundamentals are sturdy.

Innovative Industrial Properties is tied to regulated cannabis real estate with long leases, and while it carries its own sector risks, it is a differentiated way to play income plus potential rate relief later in the year.

In a regime of slow disinflation, income vehicles can regain attention as investors start gaming out the first cut without needing it tomorrow.

What to watch: Rent collections, tenant health, and lease renewals. This is a fundamentals-first hold, not a macro lottery ticket.

Performance Food Group (NYSE: PFGC)

Inflation that is uneven is a gift to distributors who help customers manage it. Performance Food supplies restaurants and foodservice operators who are constantly adjusting menus, portion sizes, and pricing to protect margins.

When grocery and input costs shift around, operators lean harder on partners that can source efficiently and keep product flowing.

That is how you turn a messy inflation tape into a steady demand environment for the middlemen that run the pipes.

What to watch: Case volume growth, margin stability, and management commentary on restaurant demand and pricing.

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Bottom Line

January’s CPI cooled to 2.4% and that is a real win. But the market is still trading the texture: energy relief, goods trying to reheat in tariff-exposed categories, and services that stay stubborn. The best way to play it is to own businesses that benefit from the mix, not ones that need the Fed to rescue them on the next meeting.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes