Inflation & Purchasing Power
A measured change in a selected price index—not a uniform increase in every price or a precise measure of each household purchasing power.
Inflation is the rate of change in a selected price index over a period. Different indexes, weights, populations, geographies, and methodologies can produce different rates, and an aggregate inflation measure may differ materially from an individual household or business experience.
📊 Current Inflation Data
Updated August 04, 2026Source: Federal Reserve Economic Data (FRED). Values may be delayed.
Frequently Asked Questions
Does inflation mean every price rises at the same rate?
No. Prices can rise, fall, or remain unchanged across categories. Headline indexes aggregate many items using weights and methods that may not match a particular consumer spending pattern.
How should real return be calculated?
A common approximation subtracts inflation from nominal return, while an exact one-period real return is (1 + nominal return) divided by (1 + inflation) minus 1. Taxes, fees, and timing also affect purchasing-power results.
What is the difference between CPI and PCE?
They cover different populations, weights, data sources, formulas, and treatment of substitution and third-party spending. Neither is universally better for every purpose; the chosen measure should match the question.
Does holding cash always lose purchasing power?
Not necessarily in every period. The result depends on the interest earned, inflation measure, taxes, fees, currency, and time horizon. Cash also provides liquidity and nominal stability but has reinvestment and inflation risk.