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What are economists' predictions for US inflation in late 2025?
Executive summary
Economists’ forecasts for U.S. inflation in late 2025 are mixed but clustered above the Federal Reserve’s 2% target: several professional forecasts and institutions point to CPI or PCE rates around roughly 2.9–3.2% by year-end, while market-based and survey measures of longer-run expectations remain somewhat higher than 2% (for example, some consumer expectations were ~3.2–3.6% in late 2025) [1] [2] [3] [4]. Coverage is uneven on exact late‑2025 consensus numbers, and different measures (CPI vs. core CPI vs. PCE) and timing produce materially different headline figures in the sources available [1] [2] [5].
1. What the big forecasters are saying: “Near‑3% by year‑end”
Major private forecasters in the sample—Deloitte and RBC Economics—expect inflation to be around or above 2.9–3.2% through 2025, with Deloitte projecting average CPI growth of 2.9% in 2025 (and a modest acceleration into 2026), and RBC explicitly forecasting headline and core CPI above 3% by the end of 2025, citing housing measures and tariff effects as key drivers [1] [2].
2. Why some economists see upward pressure: rents, tariffs, and mechanical effects
RBC argues Owners’ Equivalent Rent (OER) is a structural floor for CPI because home‑price trends mechanically feed into OER with a long lag—home price growth earlier in the cycle is pushing OER higher into late 2025—and they also highlight tariffs and pass‑through to goods and services as a later‑arriving inflation impulse [2]. Deloitte likewise flags tariffs as an under‑appreciated inflationary channel and notes its own assumption that about 60% of tariff costs pass to consumers, meaning forecasts may understate tariff-driven inflation [1].
3. Alternative signals: Fed nowcasts, expectations, and data uncertainty
Federal Reserve Bank tools provide high‑frequency nowcasts and model‑based expectation estimates (Cleveland Fed nowcasts for CPI and PCE, and inflation‑expectation models), which help track near‑term momentum but do not appear in the sample as specific late‑2025 point predictions; the Cleveland Fed’s resources show how practitioners extract expectations from daily and weekly inputs rather than producing a single consensus number [6] [7]. Market and survey indicators in the sample show consumer inflation expectations around 3.2–3.6% in late 2025, implying that some households and market actors expect inflation to remain above 2% [3] [4].
4. Recent data anchoring forecasts: September 2025 prints and their implications
September 2025 CPI prints in the reporting sample show annual CPI around 3.0% (September up 3.0% year‑over‑year per The Guardian and TradingEconomics reporting), and contemporaneous press pieces cite Fed projections that PCE might average about 3.0% in 2025 before easing to 2.6% the following year—facts that feed into private forecasters’ expectations for late‑2025 inflation remaining elevated relative to pre‑2021 norms [8] [9] [5].
5. Cross‑section of views and the size of disagreement
The available sources do not show a tight numerical consensus; instead they present a band—roughly 2.5% to just over 3% for headline measures—depending on whether forecasters emphasize PCE versus CPI and how they model tariffs and housing lags [1] [2] [10]. Some forecasters (and the Fed’s own projections cited in reporting) expect a drop toward the mid‑2% range in 2026, suggesting the disagreement is mainly about timing and persistence, not complete divergence [5] [1].
6. Key uncertainties that will decide late‑2025 inflation
Sources repeatedly highlight three decisive unknowns: [11] the evolution of rent/OER and housing‑price lags that mechanically feed CPI [2]; [12] tariff policy and the degree of pass‑through to consumer prices [2] [1]; and [13] near‑term monthly inflation momentum—if early‑2025 months average lower rates the 12‑month comparisons fall quickly, but if not, inflation could stick higher—an issue emphasized by regional Fed analysis [14] [2].
7. What this means for readers and policymakers
If private forecasters’ scenarios prove accurate, consumers and policymakers will be dealing with inflation a full percentage point above the Fed’s 2% goal into late 2025, which would pressure real incomes, Social Security cost‑of‑living adjustments, and the Fed’s rate decisions; conversely, if monthly inflation weakens as some nowcasts suggest, headline rates could be lower than the high‑end forecasts cited here [8] [6] [5].
Limitations and gaps: available sources do not provide a single, uniform “economists’ consensus” number specifically labeled “late‑2025” across CPI and PCE; instead the evidence in these items points to a range and to the key mechanisms behind differences in forecasts [2] [1] [7].