From gas to housing to groceries, consumers can’t escape inflation in their everyday lives. So why can’t policymakers agree on what the data is telling them – and if prices are falling fast enough?

With tariffs pushing up prices of goods and energy markets swinging on geopolitical news, the Federal Reserve’s policymaking committee concluded its July 2026 meeting with a contentious 9-3 vote to hold interest rates steady. But three dissents signaled unease by pushing for a rate hike – the most in nearly a decade.

Fed Chair Kevin Warsh tried to thread the needle, emphasizing that inflation still must fall without tipping his hand on where rates would go in the future. He emphasized that the central bank won’t loosen its standards, declaring there’s “no soft inflation target.”

But the Fed’s meeting was followed by mixed news the following day, when its preferred gauge showed that inflation is still well above its 2% target, even though it dipped from 4.1% in May to 3.7% in June.

This confusion is a big reason why the once-obscure argument over the best inflation speedometer is heating up. And the outcome of this debate could change how the Fed thinks about where it sets interest rates. It isn’t just an academic debate: These discussions can dictate mortgage rates, wage growth and daily household budgets, a chief concern for inflation-weary Americans.

We’re scholars who study corporate finance and business decision-making amid uncertainty. As we previously wrote for The Conversation U.S., the effect of high energy prices has seeped into the broader economy.

The latest data suggests that the path to relief for inflation-weary Americans remains uncertain. In fact, despite the Fed leaving rates unchanged, U.S. borrowing costs hit a 19-year high this week.

What’s the actual inflation rate?

Inflation is often discussed as if it’s a simple math problem: How much did prices go up?

But it’s not easy to measure because economists first need to think about which prices to consider. Then they need to calculate how much of those goods and services Americans buy in the month in question. Once they incorporate all of these moving parts, the goal – assessing the change in prices – is even more difficult to measure.

That’s why there are different answers to that seemingly basic question.

Is inflation 3.7%, the government’s year-on-year headline reading for June 2026 under the Fed’s preferred inflation index, the personal consumption expenditures price index? Or is it 3.3%, from the same report but with the more volatile components of food and energy removed? Then again, it could be 2.2%, a less volatile metric calculated........

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