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Personal Consumption Expenditures Price Index (PCE)

Macro & the Fed

The PCE price index, published monthly by the Bureau of Economic Analysis (BEA), measures price changes across consumer spending.

The Fed's 2% inflation target is defined in terms of PCE, not CPI. PCE has broader coverage (it includes, for example, health care paid by employers on households' behalf), gives less weight to housing, and better captures consumers switching from goods that got pricier to cheaper ones. Because of these differences PCE inflation usually runs a little below CPI inflation.

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