Federal Reserve Bank (Fed) of Dallas Trimmed Mean Personal Consumption Expenditures (PCE) Inflation Rate

The Trimmed Mean PCE Inflation Rate is an alternative measure of core inflation in the price index of private consumption expenditure (PCE). It is calculated by Dallas Federal Reserve employees using data from the Bureau of Economic Analysis (BEA).

A Trimmed Mean PCE Inflation Rate that separates "noise" from "signal" achieves a more accurate measure of core inflation by curtailing the largest increases and decreases in prices by a certain percentage. In the United States, the Dallas Federal Reserve "trims" the values down from 19.4% and up from 25.4%. The Dallas Federal Reserve explained why its indicator better captures inflation: Twice since 2014, the inflation rate of core private consumption expenditure (PCE) excluding food and energy has slowed sharply, but only to reverse direction. The US Federal Reserve's trimmed average PCE inflation rate in Dallas both times identified the downward movement as temporary and was able to look beyond it.

The PCE inflation rate is an important tool for measuring inflation and assessing monetary stability, and it serves as a yardstick for wage negotiations and is included in the calculation of GDP. If the index rises, this usually has a positive effect on the USD.