Forex Dictionary

Core PCE Price Index

Core PCE Price Index

The Core Personal Consumption Expenditures (PCE) Price Index measures the rate of inflation experienced by consumers when purchasing goods and services, excluding Food and Energy. Like CPI, it reflects the price change in consumer goods and services. PCE differs slightly from CPI in that it only measures goods and services targeted towards and consumed by individuals. Food and Energy account for roughly 25% of PCE, but they can be very volatile from month to month and can distort the overall picture. PCE with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend. Traders watch the Core PCE Price Index closely because it's the Federal Reserve's preferred consumer inflation indicator.