Inflation is a sustained rise in the general level of prices for goods and services in an economy over time, typically measured as the percentage change in a price index-most commonly the Consumer Price Index (CPI) or the Personal Consumption Expenditures (PCE) price index-over a twelve-month period. As prices rise, each unit of currency buys fewer goods and services, reflecting a decline in the purchasing power of money. This operational description is widely agreed upon. Economists and other observers do, however, dispute the relative importance of different causes of inflation in specific episodes; see Viewpoints below and inflation-causes-debate.

As of mid-2026, U.S. inflation has accelerated after several years of gradual decline from the 2021-2022 surge. The annual headline Consumer Price Index (CPI) rose 4.2% in May 2026, up from 3.8% in April and 3.3% in March, marking the third consecutive monthly acceleration and the highest reading since April 2023.¹⁾ Core CPI, which excludes food and energy, rose 2.9% year-over-year in May, also a multi-year high.²⁾ Analysts and Federal Reserve commentary attribute much of the recent acceleration to an energy price shock connected to the conflict with Iran, alongside the lagged pass-through of tariffs imposed in prior years.³⁾

The Federal Reserve's Federal Open Market Committee (FOMC), under Chairman Kevin Warsh, held the federal funds rate steady at a target range of 3.50%-3.75% through the first half of 2026 following a series of cuts in late 2024 and 2025.⁴⁾ In its June 2026 Summary of Economic Projections, the median FOMC participant revised projected federal funds rates upward and raised core PCE inflation projections for Q4 2026 from 2.7% to 3.3%, suggesting officials now expect inflation to remain more persistent than previously forecast.⁵⁾ Forecasters are divided on the path forward: the Congressional Budget Office's baseline projections, which assume current law, anticipate inflation gradually easing toward the Fed's 2% target as tariff effects fade,⁶⁾ while other analysts warn that fiscal deficits, tightened immigration-driven labor markets, and looser-than-recognized financial conditions could push inflation higher still.⁷⁾ This divergence connects to broader debates over the relationship between inflation, monetary policy, and economic stagnation; see Stagflation.

The historical development of inflation theory and major inflationary episodes-including the 1970s stagflation era, the post-2020 pandemic-era surge, and earlier 20th-century episodes-is addressed at greater length on a dedicated page. See inflation-history.

Economists broadly agree, across multiple schools of macroeconomic thought, that sustained inflation over the long run is closely tied to the growth rate of the money supply relative to output, and that central banks can influence inflation through monetary policy tools such as interest rates. There is likewise wide agreement that unanticipated inflation redistributes wealth between creditors and debtors and complicates economic planning. See inflation-monetary-consensus. There is no comparable consensus, however, on the relative weight of monetary, fiscal, supply-side, or expectations-driven factors in any specific inflationary episode; that is a matter of ongoing debate.

• Monetarist viewpoint - holds that inflation is primarily a monetary phenomenon, driven over the medium and long run by the growth rate of the money supply exceeding the growth of real output. See inflation-monetarist-viewpoint.
• Keynesian/demand-side viewpoint - emphasizes aggregate demand, output gaps, and the role of fiscal policy and wage-price dynamics in driving inflation, with monetary policy as one tool among several. See inflation-keynesian-viewpoint.
• Supply-side/cost-push viewpoint - attributes significant inflationary episodes to shocks in input costs-such as energy, tariffs, or labor shortages-rather than primarily to monetary or demand factors. See inflation-supply-side-viewpoint.
• Modern Monetary Theory viewpoint - argues that inflation results from spending exceeding an economy's real productive capacity rather than from government deficits or money creation per se, and that fiscal policy can manage inflation directly. See inflation-mmt-viewpoint.
• Austrian viewpoint - views inflation as fundamentally a function of central bank credit and currency expansion, often emphasizing risks of malinvestment and currency debasement. See inflation-austrian-viewpoint.
• Skeptical-of-official-statistics viewpoint - holds that official CPI and PCE measures understate true cost-of-living increases due to methodological choices such as substitution and hedonic adjustment. See inflation-statistics-skeptical-viewpoint.

• Dispute over whether the Federal Reserve's 2021-2022 characterization of inflation as “transitory” reflected a forecasting error or a deliberate policy choice. See inflation-transitory-controversy.
• Disagreement over the extent to which tariff policy implemented under the International Emergency Economic Powers Act (IEEPA) has contributed to 2025-2026 inflation, including pending legal challenges to that authority. See inflation-tariff-ieepa-controversy.

• inflation-history
• inflation-causes-debate
• inflation-monetary-consensus
• inflation-monetarist-viewpoint-keynesian-viewpoint-debate
• inflation-transitory-controversy
• inflation-tariff-ieepa-controversy
• Stagflation
• Federal Reserve
• US Dollar
• Monetary Policy

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