San Francisco Fed Economists Develop Inflation Shock Index Hovering Near Zero in 2026

According to the San Francisco Federal Reserve on July 6, economists Kevin Lansing and Adam Shapiro released a report introducing the Inflation Shock Momentum Index (ISMI), a new metric designed to track inflation dynamics. The ISMI, derived from monthly inflation shocks in the Personal Consumption Expenditures (PCE) price index, has fluctuated near zero throughout 2026, suggesting that elevated inflation levels around 2% could persist in the near to medium term.

Headline PCE inflation reached 4.1% year-over-year in May, marking the first time in three years that the inflation rate exceeded 4%.