An economic indicator closely monitored by economists indicates that inflation is decelerating, although not at the same pace as the well-known indexes.
According to the Dallas Federal Reserve’s “trimmed mean” inflation rate, there was a decrease to 4.2% from 4.6% in the period from June 2022 to June 2023.
However, this figure is significantly higher than the 3% rate reported by the central bank’s preferred inflation gauge, the PCE index. It is also slightly higher than the government’s core PCE rate of 4.1%, which was released last Friday.
What exactly is a trimmed mean inflation rate?
The Dallas Fed eliminates goods and services with the largest price fluctuations each month to provide a clearer picture of underlying inflation trends.
At times, headline inflation numbers can be distorted by significant changes in prices for specific goods such as gasoline, rent, and airfares.
The annualized rate of trimmed mean inflation reached its peak at 4.8% in April.
Meanwhile, the annualized trimmed mean inflation rate for the past six months experienced a slight dip from 4.4% to 4.1%. This is undoubtedly positive news, but it still indicates that prices are rising rapidly.
The Federal Reserve’s objective is to bring inflation back to 2% or lower, similar to pre-pandemic levels. Last year, inflation surged to as high as 9%, as measured by the widely recognized consumer price index.