Board of Governors of the Federal Reserve System

Figure 1: PCE Inflation Decomposition: Historical Average (since 2000) vs March 2026 (Annualized 4-mo. Rate)

This is a bar chart comparing inflation contribution in percentage points across two time periods: "Historical Average" and "March 2026". The y-axis ranges from 0 to 6 percentage points. The chart displays two variables using stacked bars: "Price Index Excluding Software" (blue bars) and "Software Contribution" (gray bars). For each time period, there are two categories shown: "Core" and "Core Goods".

In the Historical Average period, the Core category shows approximately 2.2 percentage points contribution, almost entirely from Price Index Excluding Software (blue), with minimal Software Contribution (gray). The Core Goods category during this period shows a much smaller total contribution of about 0.2 percentage points. For March 2026, both categories show significantly higher contributions: Core reaches about 4.3 percentage points (with approximately 3.7 points from Price Index Excluding Software and 0.6 points from Software Contribution), while Core Goods reaches about 5.4 percentage points (with approximately 2.7 points from Price Index Excluding Software and 2.7 points from Software Contribution).

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Figure 2: PCE "Computer Software and Accessories" Price Index Level and Annualized (4-Month Change)

This is a dual-panel line chart showing data from 2000 to 2025. The left panel displays the PCE "Computer Software and Accessories" Price Index Level with the y-axis ranging from approximately 60 to 260. This panel shows a blue line that demonstrates a consistent downward trend in the price index from about 250 in 2000 to approximately 65 by 2025, reflecting a significant decline over the 25-year period.

The right panel shows the 4-month annualized change in the price index with the y-axis ranging from approximately -40% to +80%. This blue line exhibits considerable volatility throughout the period, with most fluctuations occurring between -20% and +20%. However, the end of the series in 2025 shows a dramatic spike reaching approximately 80%, preceded by a significant downward movement to about -25%. This represents the largest positive change in the entire series.

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Figure 3: Korean PPI for Flash and DRAM and PPI for Circuit Boards and Storage

This figure consists of two line charts showing price trends from 2016 to 2026.

The left panel, "Korean PPI: Flash vs DRAM, 2015-present," features dual y-axes with a blue line representing Flash PPI (left y-axis, ranging from approximately 0.5 × 10⁴ to 4.5 × 10⁴) and an orange line representing DRAM PPI (right y-axis, ranging from approximately 1.0 × 10⁴ to 3.0 × 10⁴). Both indices show fluctuations throughout most of the period, with Flash varying between 1.0-2.0 × 10⁴ and DRAM showing more pronounced cycles with peaks around 2018 and 2022. By 2026, both indices spike dramatically upward, with Flash reaching about 4.0 × 10⁴ and DRAM reaching about 3.0 × 10⁴.

The right panel, "Boards vs Storage, 2015-present," also features dual y-axes. It shows three lines: a solid blue line for "BOARD" (left y-axis, ranging from approximately 80 to 220), a dotted blue line for "PBOARD" (same left y-axis), and an orange dashed line for Storage PPI (right y-axis, ranging from approximately 56 to 74). The solid blue line shows modest growth until 2023 before rising more sharply to about 200 by 2026. The dotted blue line remains relatively flat until about 2023 and then declines. The Storage PPI fluctuates between 58-62 for most of the period, with a notable dip around 2020, before rising dramatically to about 72-74 by 2026.

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Figure 4: Software PPI 4-Month Annualized Change since 2015

This is a line chart showing the 4-month annualized percentage change in the Software Producer Price Index from 2016 to 2026. The y-axis ranges from -15% to 30%, while the x-axis spans the 10-year period. The chart displays a single blue line that fluctuates considerably throughout the period, generally oscillating between -10% and +15%. The line shows notable volatility with several peaks reaching approximately 15% in 2018, 2020, and 2024, and significant dips, including one to around -15% near 2022. Most notably, there is a dramatic upward spike at the very end of the series in 2026, where the value shoots up to approximately 30%, representing the highest value in the entire chart.

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Figure 5: March 2026 (Annualized 4-mo. Rate) for Core, Core Goods PCE Inflation w/ Adjustments

This is a bar chart comparing annualized inflation rates in percentages across different adjustment methodologies. The y-axis shows "Annualized Inflation Rate (%)" ranging from 2% to 6%. The chart displays four different measurement approaches for each of two categories: "Core PCE" and "Core Goods PCE". The four approaches are represented by different colored bars: Unadjusted Price Index (blue), Category Mismatch-Adjusted (red), Category Mismatch and Partial Quality-Adjusted (green), and Trend-Adjusted since 2000 (purple).

For Core PCE, the rates decrease with each adjustment: Unadjusted (4.35%), Category Mismatch-Adjusted (4.22%), Category Mismatch and Partial Quality-Adjusted (3.96%), and Trend-Adjusted (3.65%). For Core Goods PCE, the same pattern occurs but with larger values and more substantial reductions: Unadjusted (5.47%), Category Mismatch-Adjusted (4.81%), Category Mismatch and Partial Quality-Adjusted (3.68%), and Trend-Adjusted (2.39%). This shows that each successive adjustment method results in lower inflation rate estimates, with the most significant differences appearing in the Core Goods PCE category.

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