PCE
PCE Price Index
The PCE price index, published by the Bureau of Economic Analysis, is the inflation measure the Federal Reserve officially targets at 2%.
| Published by | Bureau of Economic Analysis (BEA) |
|---|---|
| Frequency | Monthly, near month-end |
| Release time | 8:30 AM ET |
What it measures
PCE measures prices across all household consumption, with weights that update as spending shifts. Core PCE (ex food and energy) is the Fed’s target variable.
Why traders watch it
- This is literally the number the 2% target refers to — the Fed’s reaction function keys off core PCE.
- Because CPI and PPI print earlier, PCE is often well-forecast; the surprise, when it comes, hits rate expectations hard.
How to read it
- Core PCE MoM to two decimals is what matters; 0.2% vs 0.3% is the whole game.
- The supercore (core services ex housing) is the Fed’s persistence gauge.
- Same-release personal income and spending color the demand side.
FAQ
Why does the Fed prefer PCE over CPI?
PCE covers a broader consumption base, updates its weights with actual spending behavior, and historically runs a few tenths cooler than CPI. The 2% inflation target is defined on PCE.
Is PCE predictable from CPI and PPI?
Largely — economists map CPI and PPI components into a PCE estimate. But mapping error of a tenth happens, and at the Fed’s margin a tenth moves markets.
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The official source of each release is authoritative. Not investment advice.