Dallas Fed Trimmed Mean Inflation Falls to 2.3% on May 29, but Economists Warn of Underestimation

According to Dallas Federal Reserve data released on May 29, the Trimmed Mean inflation gauge, a metric favored by Federal Reserve Chair Kevin Warsh, fell to 2.3% year-over-year in April, down from 2.4% in March. However, multiple economists and policy officials warned the indicator may systematically underestimate actual inflation pressure. Dallas Fed economist Tyler Atkinson noted that due to synchronized price increases across goods categories driven by tariff policies, the model's underlying statistical assumptions have broken down, potentially artificially depressing the reading.

Meanwhile, the Federal Reserve's core PCE inflation index, its long-standing reference metric, continues to accelerate. U.S. Commerce Department data showed that as of April, the 12-month core PCE rose 3.3% year-over-year, marking the fastest pace since 2023. Standard Chartered analysts stated it is "difficult to argue the disinflation reflected by Trimmed Mean is real," noting the metric's historical performance and predictive power are weaker than core PCE.