2006 News Releases

For immediate release:
September 29, 2006

Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org

Dallas Fed Says Latest Trimmed Mean PCE Inflation Rate Favorable News

DALLAS—The decline in the Trimmed Mean PCE inflation rate could indicate good news on the inflation front, according to Federal Reserve Bank of Dallas President and CEO Richard Fisher.

The Dallas Fed’s Trimmed Mean PCE for August fell to an annualized rate of 2.5 percent from July’s 3.2 percent rate. Over the prior six months, the index had posted an average annualized rate of 3 percent.

“This reduction in the Trimmed Mean PCE is the first encouraging sign that inflation pressures in the U.S. economy are beginning to abate,” Fisher said. “And though we appear to be on the right path, we would like to see reductions in other broad inflation measures as well.”

The overall PCE inflation rate for August was 2.9 percent annualized, while the inflation rate for PCE excluding food and energy was 2.8 percent, according to the Bureau of Economic Analysis. The Dallas Fed believes the Trimmed Mean measurement better captures the underlying trend of overall consumer inflation.

The Trimmed Mean is calculated monthly by the Dallas Fed as an alternative measure of core inflation in the price index for the Commerce Department’s PCE. The Trimmed Mean is calculated using data from the BEA.

For additional information on the Trimmed Mean PCE, visit the Dallas Fed web site at www.dallasfed.org.