Inflation
Consumer and expenditure-based price measures — the Fed's 2% mandate anchor.
Consumer Price Index (CPI)
CPI measures the average change over time in the prices paid by urban consumers for a specific "basket" of goods and services. It strictly measures out-of-pocket expenses — what consumers actually pay at the register. It does not capture…
ReadCore Consumer Price Index (Core CPI)
Core CPI is the standard CPI with the highly volatile categories of food and energy removed. It is formally referred to by BLS as "CPI for all items less food and energy."
ReadCore Personal Consumption Expenditures Price Index (Core PCE)
Core PCE is the PCE price index with the volatile food and energy categories removed. It is officially called the PCE Price Index Excluding Food and Energy.
ReadPersonal Consumption Expenditures Price Index (PCE)
PCE is a broader measure of prices paid for goods and services. Unlike CPI (which only tracks what consumers pay out-of-pocket), the PCE includes expenses paid on behalf of consumers, such as employer-sponsored health insurance and gover…
ReadIndicator Map#
Appendix Table#
| Indicator | Link | Provider | Survey | Frequency | What It Tells Us | Indicator Type |
|---|---|---|---|---|---|---|
| CPI | Open note | BLS | Consumer Price Index Survey | Monthly | Average price change for urban consumers' fixed market basket | Lagging |
| Core CPI | Open note | BLS | Consumer Price Index Survey | Monthly | Underlying "sticky" inflation, ex-food and ex-energy | Lagging |
| PCE | Open note | BEA | National Income and Product Accounts (NIPA) | Monthly | Broader price measure including spending paid on behalf of consumers | Lagging |
| Core PCE | Open note | BEA | National Income and Product Accounts (NIPA) | Monthly | Fed's preferred inflation gauge — PCE ex-food and ex-energy | Lagging |
CPI vs PCE: Key Differences#
| Feature | CPI | PCE |
|---|---|---|
| Provider | BLS | BEA |
| Scope | Out-of-pocket urban consumers only | All spending by or on behalf of households |
| Formula | Modified Laspeyres — fixed basket, updated annually | Chained Fisher-Ideal — dynamic basket, adjusts monthly |
| Substitution | Does not adjust in real-time | Adjusts dynamically as consumers substitute |
| Shelter weight | ~34% | ~16% |
| Healthcare weight | Small — out-of-pocket only | ~20–22% — includes Medicare, Medicaid, employer-paid |
| Typical reading | Runs "hotter" | Runs lower |
How To Read#
- Headline consumer prices: Consumer Price Index (CPI) measures what urban consumers pay out-of-pocket for a fixed basket of goods and services.
- Sticky structural inflation: Core Consumer Price Index (Core CPI) strips out volatile food and energy to reveal whether inflation is becoming persistent and structural.
- Broader economy-wide prices: Personal Consumption Expenditures Price Index (PCE) covers spending paid on behalf of consumers and dynamically adjusts for substitution behaviour.
- Fed's policy anchor: Core Personal Consumption Expenditures Price Index (Core PCE) is the Federal Reserve's officially preferred inflation measure; the 2% target is defined against this series.
- Why all lagging: See Why Inflation Indicators Are Lagging for the structural reasons (transmission chain, sticky prices, data collection lag).
Clean Macro Read#
Rising Core Personal Consumption Expenditures Price Index (Core PCE) above the Fed's 2% target signals persistent inflation and raises the probability of tighter monetary policy. Watch Core Consumer Price Index (Core CPI) alongside Core PCE for cross-methodology confirmation. Headline CPI and PCE add context around food and energy shocks, but core measures are preferred for identifying durable inflation trends.