Macro context
CPI vs PCE: the two US inflation measures
The difference between the Consumer Price Index (CPI) and the PCE price index — who publishes each, what they cover, why CPI often runs higher, which one the Fed targets, and what "core" excludes.
Two indexes, two agencies
The Consumer Price Index (CPI) is published monthly by the Bureau of Labor Statistics (BLS) and measures prices paid by urban consumers for a basket of goods and services. It is usually released around the middle of the month for the prior month.
The Personal Consumption Expenditures (PCE) price index is published by the Bureau of Economic Analysis (BEA) as part of the monthly Personal Income and Outlays report, usually near the end of the month. It measures prices across all personal consumption, including spending made on households' behalf.
Why the two usually differ
Scope: PCE includes spending people do not pay for directly, such as employer-provided health insurance and Medicare and Medicaid outlays. That gives medical care a larger weight in PCE and housing a smaller one than in CPI.
Formula: CPI uses fixed basket weights updated periodically, while PCE uses a chain-weighted formula that reflects consumers substituting between goods as relative prices change. Together with the lower shelter weight, these differences mean CPI inflation has often run above PCE inflation.
Which one the Fed targets
The FOMC's longer-run goal of 2% inflation is defined in terms of the PCE price index. CPI still matters: it arrives earlier, it moves markets on release day, and it is used for inflation-indexed payments such as Social Security cost-of-living adjustments and TIPS.
"Core" versions of both indexes exclude food and energy, whose prices are volatile. Core is not a measure of what households pay — it is used to see the underlying trend through short-term swings.
Reading the numbers on Aerarium
The macro dashboard tracks headline and core CPI (FRED series CPIAUCSL and CPILFESL) and headline and core PCE (PCEPI and PCEPILFE). These are index levels; inflation rates are the year-over-year change in the index.
Monthly series are dated by the start of the month they measure, so an August reading is dated August 1 even though it is published in September. That is why a monthly series can look weeks "behind" a daily Treasury yield on the same dashboard — it is the release schedule, not stale data.
Common questions
Why is CPI usually higher than PCE?
Mostly because CPI gives housing a larger weight and uses fixed basket weights, while PCE is broader in scope and chain-weighted so it reflects substitution between goods.
Which inflation measure does the Federal Reserve target?
The Fed's 2% longer-run inflation goal is stated in terms of the PCE price index.
What does core inflation exclude?
Core CPI and core PCE exclude food and energy prices, which are volatile, to show the underlying trend.
When are CPI and PCE released?
CPI usually comes from the BLS around the middle of the month for the prior month; PCE usually comes from the BEA near the end of the month. Exact dates are on the economic calendar.