Inflation is a topic of perennial interest because it influences the behavior and plans of consumers, businesses, financial markets, pension funds, governments-in essence, everyone in an economy. But historically, the Cleveland Fed’s model nowcasts have done quite well-in many cases, they have been more accurate than common benchmarks from alternative statistical models and even consensus inflation nowcasts from surveys of professional forecasters. As with any forecast, there is no guarantee that these inflation nowcasts will be accurate all of the time. The model generates nowcasts of monthly inflation, and these are combined for nowcasting current-quarter inflation. Our inflation nowcasts are produced with a model that uses a small number of available data series at different frequencies, including daily oil prices, weekly gasoline prices, and monthly CPI and PCE inflation readings. These forecasts can help to give a sense of where inflation is now and where it is likely to be in the future. The Cleveland Fed produces nowcasts of the current period's rate of inflation-inflation in a given month or quarter-before the official CPI or PCE inflation data are released. Nowcasts are estimates or forecasts of the present. The Federal Reserve Bank of Cleveland provides daily “nowcasts” of inflation for two popular price indexes, the price index for personal consumption expenditures (PCE) and the consumer price index (CPI).

Interactive inflation games