U.S. Inflation & Price Tracker

Chris Kissell, Financial Writer  |  Reviewed by Offain Gunasekara  |  Updated: March 26, 2026

Inflation is the single most important number in the economy right now. It drives what the Fed does with interest rates, which drives the prime rate, which drives what you pay on your mortgage, credit card, and car loan. I track twelve different inflation measures daily so you don’t have to—from the headline CPI number that makes the evening news to obscure measures like the Cleveland Fed’s median CPI that actually tell you more about where prices are headed. This page pulls directly from the Federal Reserve’s FRED database and updates nightly, giving you the clearest picture available of what’s happening with prices in America.

How Inflation Is Measured

There’s no single “inflation number.” The government produces several different measures, each capturing a slightly different slice of the economy. The most widely cited is the Consumer Price Index, or CPI, published monthly by the Bureau of Labor Statistics. It tracks the price of a basket of about 80,000 goods and services that a typical urban household buys—everything from rent and gasoline to medical care and haircuts.

Then there’s the PCE price index, published by the Bureau of Economic Analysis. The Fed officially targets PCE inflation at 2%, not CPI. The two measures differ in important ways: PCE uses a broader spending basket, accounts for consumers substituting cheaper alternatives when prices rise, and gives less weight to housing. That’s why PCE and CPI often diverge, and why you need to watch both.

The “core” versions of each—Core CPI and Core PCE—strip out food and energy prices. That sounds counterintuitive since everyone buys food and gas, but these categories are so volatile month-to-month that they obscure the underlying trend. If oil spikes 20% because of a geopolitical crisis, headline CPI jumps even though nothing else changed. Core measures smooth that noise out. The Cleveland Fed’s Median CPI takes this filtering even further, looking at the middle price change across all items, which makes it one of the most stable inflation indicators available.

Current Inflation Trends

The big picture is clear: inflation has come down dramatically from its 2022 peak. The headline CPI hit 9.1% in June 2022—the highest in 40 years. Today at 2.4%, we’ve covered most of the distance back toward normal. But that “last mile” from roughly 2.5% down to the Fed’s 2% target is proving stubbornly difficult. It’s like losing weight—the first 30 pounds come off fast, but the last 10 are a grind.

The trend has been encouraging. Goods inflation has essentially normalized—supply chains are long since repaired, used car prices have come back to earth, and most consumer products are seeing flat or falling prices. The problem is services. Services inflation—which includes housing, healthcare, insurance, and dining out—remains elevated because it’s driven by labor costs, and the labor market is still tight. Wages are growing around 4% annually, and businesses pass those costs through to customers. Until wage growth moderates to roughly 3%, services inflation is unlikely to fully cooperate.

One useful way to cut through the noise is the Cleveland Fed’s Median CPI, currently at 2.1%. Because it ignores outliers in both directions, it gives you the “typical” price change across the economy. When median CPI is near 2%, it means the broad middle of the price distribution is behaving normally, even if a few categories like interest rates and auto insurance remain outliers.

What Markets Expect for Inflation

While actual inflation data looks backward at what already happened, financial markets try to look forward. The most watched forward-looking measure is the Treasury breakeven inflation rate. It’s calculated by comparing the yield on regular Treasury bonds to Treasury Inflation-Protected Securities (TIPS). The difference between the two is what bond investors collectively expect inflation to average over that period.

Right now, the 10-year breakeven sits at 2.34%, and the 5-year breakeven is at 2.56%. This is important because it means the trillions of dollars in the bond market are betting that inflation will average close to the Fed’s target over the next decade. When breakevens are anchored near 2-2.5%, it signals that inflation expectations haven’t become “unanchored”—a scenario the Fed fears deeply because it can become self-fulfilling.

Consumer expectations tell a more mixed story. The University of Michigan’s survey of consumer inflation expectations has been running at 4.0%, which is notably higher than both market expectations and actual inflation. However, consumer surveys tend to be heavily influenced by gas prices and grocery bills—the items people buy most frequently. Professional forecasters and bond markets generally provide more accurate long-term predictions than consumer surveys, which is why the Fed watches breakevens closely.

How Inflation Drives the Prime Rate

The connection between inflation and the rates you pay on loans is direct and mechanical. The prime rate is always set at the federal funds rate plus 3 percentage points. The federal funds rate is what the Fed uses to fight inflation—when inflation is too high, they raise it; when inflation is at target, they can lower it. Right now the fed funds rate is 4.25-4.50%, making the prime rate 7.50%.

With CPI at 2.4% and Core PCE at 3.1%, the Fed doesn’t have clear justification to cut rates aggressively. Chair Powell has repeatedly stated the Fed wants to see “sustained” progress toward 2%, not just a couple of good months. That means the prime rate is likely to stay elevated through at least mid-2026. Every credit card, HELOC, and variable-rate business loan in America is priced off the prime rate, so this matters for hundreds of millions of borrowers.

Here’s the cascade: CPI comes in hot → Fed holds rates steady (or raises) → prime rate stays at 7.50% (or goes up) → your credit card APR stays around 20.5% → HELOC rates stay above 8% → personal loan rates stay in the 10-15% range. Conversely, when inflation drops convincingly to 2% → Fed cuts → prime rate drops → borrowing gets cheaper across the board. That’s why every CPI report is a market-moving event, and why the FOMC meeting schedule is the most important calendar in finance.

Gas and Shelter: The Wild Cards

Two categories deserve special attention because they have outsized influence on both the inflation numbers and how Americans feel about inflation: gasoline and housing. Gas prices are the most visible price in the economy—you literally see them on giant signs every time you drive. At $3.96 per gallon, gas is running near moderate levels, which is helping keep headline CPI in check. But gas is also the most volatile component of the CPI basket. A hurricane in the Gulf, a production cut from OPEC, or a geopolitical flare-up can send prices jumping 30% in a matter of weeks.

Shelter costs are the opposite problem—they don’t spike overnight, but they don’t come down quickly either. The shelter component of CPI is running at 3.0% year-over-year, and it accounts for roughly 33% of the total CPI basket. That’s an enormous weight. Even if every other category hit 0% inflation, shelter alone would keep headline CPI above 1%. The good news: private-sector rent trackers from Zillow and Apartment List show that new lease rents have been roughly flat for over a year. The bad news: the CPI measures all rents, including renewals, so it takes 12-18 months for softer new-lease rents to fully flow through. By late 2026, this lag effect should finally bring shelter CPI below 3%.

For borrowers watching the prime rate, shelter is the key variable. If shelter inflation drops to 2.5% by year-end, core CPI could fall below 2.5%, giving the Fed confidence to cut. That would bring the HELOC rates and credit card rates down with it. Gas, on the other hand, is mostly noise—unless sustained above $5/gallon, it won’t change the Fed’s calculus on rate decisions.

Frequently Asked Questions About Inflation

What is the current U.S. inflation rate?

The headline CPI inflation rate is 2.4% year-over-year as of the most recent Bureau of Labor Statistics release. Core CPI, which excludes food and energy, is 2.5%. The Fed’s preferred measure, the PCE price index, is running at 2.8% year-over-year. All three remain above the Federal Reserve’s 2% target, though significantly below the 9.1% peak reached in June 2022.

Why does the Fed prefer PCE over CPI?

The Fed officially targets the PCE price index rather than CPI for several reasons. PCE covers a broader range of spending, including healthcare costs paid by employers and the government. It also adjusts automatically when consumers switch to cheaper alternatives—something CPI doesn’t do as effectively. PCE gives less weight to housing (about 15% vs. 33% in CPI), which means it’s less dominated by a single category. For monetary policy decisions, the Fed considers PCE a more accurate reflection of actual consumer inflation.

How does inflation affect the prime rate?

The connection is direct. The prime rate equals the federal funds rate plus 3 percentage points. The Fed raises the federal funds rate to fight inflation and lowers it when inflation is under control. With inflation currently above 2%, the Fed has kept rates elevated at 4.25-4.50%, making the prime rate 7.50%. Every variable-rate loan in America—credit cards, HELOCs, many business loans—is priced relative to the prime rate. When inflation drops convincingly to 2%, the Fed can cut, and the prime rate follows.

What are breakeven inflation rates?

Breakeven inflation rates represent the bond market’s collective expectation for future inflation. They’re calculated by comparing the yield on regular Treasury bonds to the yield on Treasury Inflation-Protected Securities (TIPS) of the same maturity. The 10-year breakeven at 2.34% means bond investors expect inflation to average 2.34% annually over the next decade. Because trillions of dollars back these bets, breakevens are considered one of the most reliable inflation forecasts available.

Why is shelter inflation so important?

Shelter costs make up approximately one-third of the CPI basket, more than any other single category. At 3.0% year-over-year, shelter inflation alone contributes roughly 1 percentage point to headline CPI. The measure is also notoriously “sticky” because it captures existing leases, not just new ones. Private-sector data shows new rents are already softening, but it takes 12-18 months for those lower rents to fully show up in the CPI shelter measure. Most economists expect shelter to be the key factor in whether inflation reaches 2% in 2026 or 2027.

When will the Fed cut interest rates?

The Fed has signaled it needs to see “sustained” progress toward 2% inflation before cutting rates. Based on current trends, most economists expect the first cut in mid-to-late 2026, likely a cautious 25 basis points. The timing depends heavily on whether shelter inflation continues cooling and whether the labor market softens enough to ease wage pressures. You can track the probability of rate changes through the FOMC meeting schedule page, which updates with the latest market expectations.

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