Personal Consumption Expenditures (PCE) Index

The PCE index, or Personal Consumption Expenditures Price Index, is a measure of the prices paid by consumers on goods and services in the U.S. The PCE index is used to track inflation and reflects the spending habits of households. The Federal Reserve prefers the PCE index over the Consumer Price Index (CPI) to measure inflation because it considers a wider range of goods than the CPI. The PCE also adjusts for changes in consumer behavior, offering a more accurate picture of economic trends and the cost of living over time.