Overview
Palanor: Inflation Pulse is a single 0–100 read of inflation pressure relative to the 2% target. High readings indicate prices, expectations, and nowcasts are running hot above target; low readings indicate disinflation or outright disinflationary risk.
Why these components
Sticky CPI carries the highest weight because sticky prices change slowly and reflect persistent — not transitory — inflation. Core CPI and PCE are the standard headline reads, with PCE getting the slightly lower weight because it is the Fed's preferred gauge already represented elsewhere. Market-based breakevens (5Y and 10Y) read expectations rather than realized prices — they often turn first. The Cleveland Fed model nowcast adds a model-based forward view. The Google Trends inflation term is the public-attention proxy.
Methodology
Level series are recentered against the 2% target (so a 2.0 reads as neutral, 4.0 as elevated, 0.5 as undershoot). The PCE deflator and core CPI use 12-month percent change because they are index levels. Each component is z-normalized after that transformation. The weighted sum maps through a logistic to 0–100. Missing components renormalize.
Interpretation
Readings above 65 indicate an inflation regime running materially above target — the kind in which the Fed is reactive and real yields stay positive. Readings below 35 indicate an undershoot or disinflationary risk regime. The most informative reading is divergence between sticky CPI (slow-moving, persistent) and the breakevens (fast, expectations-led): persistent disagreement signals a regime transition.
Caveats
This is a market- and survey-priced inflation read, not a real-time price observation. It will lag a true regime change by weeks. Breakeven readings are notoriously sensitive to TIPS liquidity, especially at the long end.
Revision — 8 October 2026
The Google Trends component (searches for "inflation") was stored from May 2026 only, one point a day, each taken from a different 90-day Google Trends window, so no two points were on the same scale and the 24-month comparison had five months to work with. It is now stored as one five-year weekly series, from October 2021, on a single scale, and every reading since May 2026 was recomputed. The index read 50.7 on 8 October before this revision and 48.4 after.