Economists predict a decline in the year-over-year core PCE inflation rate from the current 2.8% to below that figure by December 2025. This forecast is based on several factors including a continued decrease in housing inflation, as asking rents have remained flat for two years. The lag in rent increases filtering through to renewals also contributes to this expectation. However, the potential for quick policy changes like tariffs could push inflation rates up. Despite these predictions, inflation is expected to remain above the Federal Reserve’s 2% target by the end of 2025. This outlook is part of a broader set of economic questions for 2025, which also includes inquiries about the Fed Funds rate, wage increases, residential investment, housing starts, new home sales, house prices, and inventory levels.
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