Inflation
How inflation is measured, why it moves markets, and how to apply inflation context to sector and stock decisions.
Inflation affects valuation, margins, and policy. That makes it a core input for both top-down and stock-specific decisions.
The important signal is trend and persistence, not one isolated print. Markets care about where inflation is going relative to expectations.
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Where inflation stands right now
As of August 2026, CPI (All Items) YoY % stands at 3.35%, against 3.30% in the prior reading and 2.94% a year earlier. Measured against its own record — 540 observations covering 45 years back to 1981 — that is the 67th percentile. Its full range over that period runs from -1.96% in July 2009 to 10.97% in September 1981.
Core CPI YoY % is at 2.45% (46th percentile of its history since 1981, -0.67pp year over year), its lowest since March 2021. PCE YoY % is at 3.42% (54th percentile of its history since 2021, +0.68pp year over year), its lowest since February 2026. Core PCE YoY % is at 3.01% (39th percentile of its history since 2021, +0.10pp year over year), its lowest since February 2026.
Source: Federal Reserve Economic Data (FRED), series CPIAUCSL, CPILFESL, PCEPI, PCEPILFE. Percentiles are computed against each series' own full stored history, not a fixed reference period. Latest observation on this page: 2026-08-01. Refreshed automatically as new releases land.
Core Vs Headline Inflation
Headline reads include volatile components like food and energy. Core measures are often better for tracking the sticky part of inflation.
Neither should be read alone. Use both to separate transitory noise from persistent price pressure.
- CPI: consumer-facing inflation
- PCE: policy-relevant broad inflation measure
- PPI: upstream cost pressure
- Core inflation: cleaner persistence signal
How Inflation Hits Equities
Higher inflation can push yields higher and compress long-duration valuations. It can also pressure margins when costs rise faster than pricing power.
The net effect depends on sector structure, balance sheet quality, and the policy response that follows.
Sector Behavior In Inflation Regimes
Commodity-linked and pricing-power businesses often hold up better in inflationary phases. Long-duration growth typically faces more valuation pressure.
Defensives can outperform when growth slows, but leadership changes quickly when inflation momentum rolls over.
A Practical Inflation Workflow
Before major releases, check consensus and positioning. After release, confirm with yields, dollar direction, and sector leadership.
Use inflation context to filter trades, not to force them.
Understand the methodology behind the scores
See how DailyIQ combines technical indicators, news sentiment, freshness checks, and editorial review to decide what gets surfaced and indexed.