Remarks
Nerd Out Over the Two Flavors of Inflation, CPI and PCE
The government explains precisely why the two price measures have (or haven’t) diverged each quarter.
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You may be aware that the Federal Reserve doesn’t use the Consumer Price Index, which is published by the Labor Department’s Bureau of Labor Statistics, to measure its progress toward achieving an inflation rate averaging 2%. It prefers to judge itself by the personal consumption expenditures price index, which is published by the Commerce Department’s Bureau of Economic Analysis.
You may even know that the CPI tends to run higher than the PCE price index. In the year through May, for example, the CPI rose 5.0% while the PCE price index rose 3.9%.