PCE price index
A US measure of consumer spending prices; the Federal Reserve's preferred gauge.
3 min read · Reviewed September 2026
In plain words
The PCE (Personal Consumption Expenditures) price index covers a broader range of spending than the CPI and updates its weights more frequently. The Fed targets 2% on the core PCE, not the CPI — which is why the two measures sometimes tell slightly different stories.
Frequently asked questions
Why does the Fed prefer PCE over CPI?
PCE covers a wider range of spending, uses weights that update more frequently to reflect actual consumer behaviour, and includes prices paid on behalf of consumers (e.g. by employers for health insurance). It tends to run slightly lower than CPI-U.
Further reading