29 Sept 2025
This analysis examines various annualized six-month CPI growth rates across different timeframes to assess US inflation trends. It investigates whether the Federal Reserve has successfully achieved its 2% inflation target and the broader economic implications.
The analysis evaluates different types of US inflation using an annualized six-month CPI growth rate chart across various timeframes, assessing the Federal Reserve's success in reaching its inflation target.
Recent CPI data showed mixed sentiments, with headline inflation decreasing while core and super-core inflation rates increased, leading the stock market to prioritize the headline figure in its reaction.
The chart displays the annualized six-month growth rate of CPI, which calculates inflation over a six-month period and then annualizes it for comparability with yearly rates, offering a more up-to-date and sensitive measure by focusing on recent data.
The chart utilizes different colors, where each represents a 6-month period ending at a specific historical date: blue for 24 months ago, red for 18 months ago, orange for 12 months ago, purple for 6 months ago, and green for the latest 6-month period ending July 31st/August 25th.
The latest data from the green columns indicates that 'All items' CPI stands at approximately 2.4%, 'All items less shelter' is around 2.1%, 'Core CPI' (All items less food and energy) is about 2.9%, and 'Rent' inflation is approximately 3.3%.
Across all analyzed indicators and timeframes, inflation has not reached or fallen below the Federal Reserve's 2% target, demonstrating that persistent inflationary pressures remain significantly above the desired level.
Increased tariffs have exacerbated inflationary pressures, a view that contrasts with some economic perspectives denying tariff-induced inflation and challenging current reporting that may not fully reflect new tariff impacts.
The Federal Reserve faces significant challenges, including potential pressure to alter its 2% inflation target to 3%, which would undermine its credibility and independence, or risk market disillusionment regarding its ability to control inflation, particularly due to unacknowledged tariff-driven pressures.
Aggressive trade policies, such as tariffs and indirect pressures on trading partners, could accelerate deglobalization, leading to reduced international trade and potentially higher, regionally divergent inflation rates that are difficult to control globally.
Despite individual category declines, inflation across all key metrics remains consistently above the Federal Reserve's 2% target, indicating persistent challenges for monetary policy.
| InsightCategory | InsightDetail | Impact |
|---|---|---|
| Inflation Target Achievement | All core inflation metrics (All items, Less Shelter, Core CPI, Rent) consistently remain above the 2% Federal Reserve target. | Persistent inflationary pressures indicate the Federal Reserve has not yet achieved its monetary policy goal across key sectors. |
| Tariff Influence on Inflation | Increased tariffs are identified as a significant factor exacerbating current inflationary pressures, challenging opposing economic views. | Trade policies introduce an external, non-monetary factor complicating the Federal Reserve's inflation management strategies. |
| Federal Reserve's Credibility | The Federal Reserve risks undermining its independence by potentially altering its 2% inflation target or disappointing markets. | Public trust and market confidence in the Federal Reserve's ability to control inflation are under severe pressure. |
| Economic Measurement Utility | The annualized six-month CPI growth rate offers a more timely and sensitive view of inflation trends than annual figures. | This specific metric provides a clearer, more accurate, and real-time assessment of current inflationary dynamics. |
| Global Economic Outlook | Aggressive trade policies may lead to deglobalization, reducing international trade and fostering diverse regional inflation rates. | The world economy could face fragmented, higher inflation, making global monetary control increasingly difficult. |
