Inflation Statistics (2026)

US inflation is running above the Federal Reserve's target and, in 2026, heating back up. Headline CPI rose 3.7% in the year to September 2026, and the Fed's preferred PCE gauge was 3.4% in August (see the table below).

That is a step up from the roughly 2.5-3% readings of 2024-2025, driven mainly by a jump in energy prices. Inflation has cooled from its 2022 peak but has not returned to the 2% goal.

The headline and core figures are telling different stories. Core CPI, which strips out volatile food and energy, was 2.6% in September, below the 3.7% headline, an unusually wide gap.

The reason is energy: gasoline was up 34.2% year over year, pulling headline up, while the core measure reflects milder shelter costs (+3.2%). When energy swings, headline and core diverge, which is exactly why the Fed watches core.

There are two main inflation gauges, and they don't always agree. The CPI (from the BLS) is the one in headlines, but the Fed targets the PCE price index (from the BEA), which weights categories differently: 3.4% headline and 3.0% core in August 2026 (see the chart above). PCE gives energy a smaller weight, so its headline reads below CPI's 3.7% while its core reads above core CPI's 2.6%.

The Fed's 2% target is defined on headline PCE, so at 3.4% inflation is running about 1.7 times the goal, which is why policy has stayed restrictive.

After easing through 2025, inflation climbed again in 2026. Headline CPI went from 2.4% in January to 4.2% by May, eased to 3.4% in July and August as energy prices retreated, then rose to 3.7% in September when gasoline jumped 9.1% in a single month (see the table below).

This is a reminder that disinflation is rarely a straight line. An energy-led bump can quickly widen the headline rate even when underlying core inflation is drifting lower.

Inflation is never uniform. In September 2026, gasoline (+34.2%) and energy broadly (+20.4%) led the gainers, followed by electricity, restaurants and apparel, while used cars (-1.5%) and medical goods (-3.3%) actually got cheaper (see the chart and table below).

That dispersion is why the "feel" of inflation varies so much by household: a long commuter feels the gasoline spike acutely, while someone shopping for a used car sees prices falling.

Shelter is the heavyweight of the inflation basket, about a third of the CPI and roughly 40% of core CPI, so its trajectory drives the underlying trend. Shelter inflation was 3.2% over the year to September, down from 3.3% in June, though it rose 0.4% in September alone.

That slower pace is the single biggest reason core inflation (2.6%) sits well below headline. As long as housing costs keep easing, the core trend should continue to drift toward target, energy shocks aside.

Food inflation has calmed from its 2022 highs but still bites. Overall food was up 2.5% year over year in September, with groceries (food at home) up 1.8% and restaurants (food away from home) up 3.5%.

Restaurant prices tend to run hotter than groceries because they carry labor costs, which is why eating out has felt persistently more expensive through this cycle.

Step back and the arc is dramatic. Inflation was near zero in 2015, ran in the 1-2% range through the late 2010s, then exploded to 8.0% in 2022 before cooling (see the chart and table below).

The 2021-2022 surge was the worst in four decades, a mix of pandemic supply shocks, stimulus, and energy prices. Today's 3.7% is far below that peak but still above the pre-pandemic norm.

Even as the rate falls, the price level does not: past inflation is permanent. Through September 2026, the CPI-U is about 30.2% above its 2020 average, so a dollar today buys about 77 cents of 2020 goods, or equivalently, you now need about $130 to match $100 of 2020 purchasing power.

That compounding is why households still feel squeezed even when the annual rate cools: a lower inflation rate means prices are rising more slowly, not falling back.

For perspective, today's inflation is elevated but far from the record. The modern peak came in early 1980, when the 12-month rate hit about 14.8%, and the full year averaged 13.5% (see the table below).

The post-pandemic peak of 9.1% in June 2022 was the highest since 1981. At the other extreme, 2009 saw outright deflation (-0.4%) during the financial crisis, the only negative year in the last six decades.

Expectations matter because they can become self-fulfilling. As of fall 2026, consumers expected inflation of 3.9% (NY Fed, September) to 4.7% (Michigan, October preliminary) over the next year, with the NY Fed's one-year measure at its highest since May 2023 (see the table below).

Longer-run expectations were better anchored, around 3.0% over five years (NY Fed) and 3.5% over five to ten years (Michigan), though Michigan's long-run reading sits above its 2024 range of 2.8-3.2%.

The Fed's own September 2026 projections see inflation staying above target this year, then converging. Policymakers' median forecast is 3.7% PCE inflation in 2026 (up from 3.6% in June), easing to 2.3% in 2027, 2.1% in 2028 and back to the 2.0% target in 2029 (see the table below).

To get there they projected the federal funds rate near 4.1% at year-end 2026 and 2027, up from 3.8% and 3.6% in the June projections, implying policymakers expect to keep policy tighter for longer until inflation cooperates.

Inflation is a silent tax on cash. At 3.7%, money left in a low-yield account loses purchasing power every year, which is the core case for investing rather than holding cash: historically stocks have returned about 7% a year after inflation, preserving and growing real wealth.

Practical hedges include keeping only your emergency fund in cash (in a high-yield account that at least matches short rates), owning stocks and real assets for the long run, and considering TIPS or I-bonds for explicitly inflation-protected savings. The goal is a real return, growth above the inflation rate, not just a nominal one.