The Bureau of Labor Statistics announced this week that the U.S. consumer price index rose at an annual rate of 3.17 percent in April. That was the fastest rate in 10 months. Prices for gasoline, cars, and medical services helped push the index higher.
The core CPI, which excludes volatile food and energy prices, rose at an annual rate of 2.87 percent, also a faster rate than in March.
The Cleveland Fed publishes an index of expected inflation over various time horizons based on prices of Treasury Inflation Protected Securities (OTC:TIPS). As of April, inflation was expected to average 1.7 percent over the next five years, and 1.9 percent over the next ten years. Those rates were essentially unchanged from March.
The Fed has set a target of 2 percent inflation, as measured by the deflator for personal consumption expenditures in the national income accounts. Because of differences in methodology, inflation as measured by the CPI tends to run about half a percentage point higher than as measured by the PCE deflator. Taking into account both current and expected inflation, then, we can say that inflation appears to be gradually approaching the Fed's target, but it is not there yet.
Follow this link to view or download a classroom-ready slideshow with charts of the latest inflation data.