The expenditures we choose, and the prices we pay, shape our personal cost of living. Although inflation is often discussed as a single number, households experience it differently because spending patterns vary by income, age, lifestyle and financial circumstances. Those differences help explain both consumer behavior and the gap between economic data and household sentiment. The Federal Reserve’s long-run objectives remain maximum employment and 2% inflation. Its preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, rose 3.7% over the year through July 2026, while core PCE increased 3.3%. The Consumer Price Index (CPI) rose 3.4%, with prices excluding food and energy up 2.5%. Inflation remains above the Fed’s target, though well below post-pandemic peaks.