US inflation eased below survey expectations, Econbrowser analysis says
CPI moved lower in June and undershot a Wall Street Journal survey mean, while PCE estimates from the Cleveland Fed still pointed to above-trend prices.
By Ingrid Halvorsen · Staff Writer
· 3 min read
US consumer inflation declined in June and came in below the Wall Street Journal’s July survey mean, according to an Econbrowser analysis of Bureau of Labor Statistics data. The analysis said price levels remain above their pre-war trend, even as several measures of inflation have softened.
The post compared the consumer price index with core CPI, the personal consumption expenditures deflator and core PCE, using indexes shown in logarithmic form and set to January 2025 as the base month. The June PCE figure in the comparison was not an official release from the Bureau of Economic Analysis, but a Cleveland Federal Reserve nowcast dated July 14.
CPI is the main household inflation measure published by the BLS and is built from a basket of consumer goods and services. Core CPI removes food and energy, which can swing sharply from month to month. The PCE deflator, published by the BEA, is the Federal Reserve’s preferred broad inflation gauge because it covers a wider set of spending and adjusts more readily as consumers change what they buy.
A nowcast is a model-based estimate of a data point before the official release. In this case, the Cleveland Fed estimate filled the gap for June PCE in the Econbrowser comparison, allowing CPI and PCE trends to be viewed on the same chart even though the official PCE data were not included for that month.
Alternative price gauges show the same broad issue
The analysis also reviewed several other inflation measures: headline CPI, core CPI, CPI for urban wage earners and clerical workers, non-seasonally adjusted chained CPI and the American Institute for Economic Research’s Everyday Price Index. The June value for the Everyday Price Index was estimated using a regression in first differences for the period from 2025 through May 2026, according to the chart note.
Each measure captures a different part of the inflation picture. CPI for urban wage earners is tied to a narrower population than headline CPI. Chained CPI accounts for substitution, meaning it reflects the tendency of consumers to shift away from items whose prices rise relative to alternatives. The Everyday Price Index focuses on frequent purchases, giving more weight to prices households may encounter in regular transactions.
A comment on Econbrowser said the June CPI decline was broadly expected, though the drop was somewhat larger than the median forecast. The same comment said higher oil prices could feed into measured inflation in July, while noting that gasoline prices as of mid-month were still below their June average.
Housing costs remain a key part of the inflation discussion. The comment cited owners’ equivalent rent, a BLS measure estimating what homeowners would pay to rent equivalent housing, as rising 0.3% in June, or 2.9% at an annualized rate. It also said the series has been volatile recently, making the trend toward slower increases less clear.
The comment added that mortgage rates were at their highest level since last September. Higher borrowing costs can affect housing demand and affordability, but owners’ equivalent rent enters CPI through an imputed rental value rather than through mortgage payments themselves.
This story draws on original reporting from Econbrowser.
