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Will the "True"Inflation Please Stand Up? Inconsistencies Across Price Index Series

Author

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  • Wongpiyabovorn, Oranuch
  • Lence, Sergio
  • Plastina, Alejandro

Abstract

Multiple price measures in the United States may deliver differing signals about inflation, potentially complicating policy decision-making. This study evaluates the consistency of three major price indexes—Personal Consumption Expenditure Price Index (PCEPI), Consumer Price Index (CPI), and Producer Price Index (PPI)—across three headline measures and nine core measures. The results show that all headline price indexes are pairwise consistent, whereas only half of the core measures exhibit similar co-movement. Headline PCEPI is identified as the preferred headline index, while median CPI is preferable to the traditional core measures. Despite its inconsistency with median CPI, trimmed-mean PCEPI is found to be the most effective measure for capturing underlying trend inflation, based on Kalman filter estimates. Estimated trend inflation averaged 2.46% annually from May 2010 through August 2025.

Suggested Citation

  • Wongpiyabovorn, Oranuch & Lence, Sergio & Plastina, Alejandro, 2026. "Will the "True"Inflation Please Stand Up? Inconsistencies Across Price Index Series," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404382, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404382
    DOI: 10.22004/ag.econ.404382
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    References listed on IDEAS

    as
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    5. Elmar Mertens, 2016. "Measuring the Level and Uncertainty of Trend Inflation," The Review of Economics and Statistics, MIT Press, vol. 98(5), pages 950-967, December.
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