In case you’re curious, here are the latest measures of inflation in the United States:
CPI is the usual Consumer Price Index, the one you see reported in your newspaper every month. PCE is the Personal Consumption Expenditure price index, the one used by the Fed when they set monetary policy. It’s available only through December, but it’s likely that when we get the January number it will be pretty close to the CPI figure of 1.5 percent.
Both measures peaked last July and have been dropping ever since. In particular, the PCE index was above the Fed’s target of 2 percent for only a few months. It fell below the target in September and has stayed below it ever since.
Future inflation expectations have hovered between 2-2.5 percent for the past two years. The average of three different measures (the dashed line in the chart below) is currently a hair above 2 percent: