Cleveland Fed Introduces Median PCE Inflation Rate

The Federal Reserve Bank of Cleveland has introduced a new measure of trend inflation called the median PCE inflation rate. The Bank’s research shows that the median PCE inflation rate may provide a better signal of the underlying inflation trend than some other measures.

How it works: The Cleveland Fed’s median PCE inflation measure removes outliers in the basket of prices encompassed in PCE—that is, large price increases or decreases—and focuses on the median price change, which is the middle of the distribution.

Benefits: By omitting outliers (small and large price changes) and focusing on the interior of the distribution of price changes, the median PCE inflation rate helps to capture the underlying inflation trend better than either the all-items price index for personal consumption expenditures or the PCE price index excluding food and energy (also known as the core PCE price index).

Pressed for time? Here is a quick video explainer.

Next update: The median PCE inflation rate will be updated monthly as the Bureau of Economic Analysis publishes new data in the Personal Income and Outlays report. To receive a notification when the next update is posted, subscribe here.

Center for Inflation Research
The median PCE inflation rate is a new product featured at the Cleveland Fed’s Center for Inflation Research, which was established in December 2018 to improve the understanding of policymakers, researchers, and the public about inflation and the factors that influence its behavior. It joins the median CPI and trimmed-mean CPI among measures created by Cleveland Fed researchers during the Bank’s long history of innovation in the analysis of inflation.

More information on the Center and the median PCE inflation rate is available at the Cleveland Fed’s Center for Inflation Research website, including the median PCE inflation rate’s latest readings, current components, and background information. The Center’s website also contains resources for people interested in learning more about basic inflation concepts as well as inflation dynamics, such as tools for inflation charting, daily inflation nowcasting results, and model-based inflation expectations measures.

Read more: Median PCE Inflation

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.455.4479