The CPI and PCE are both important indicators of U.S. inflation. While
CPI is more important from the perspective of an individual, PCE is more
important from the perspective of monetary policy.
The CPI and PCE do not cover identical categories of personal spending. The PCE has a broader scope than the CPI, as it captures the expenditures by both rural and urban consumers. Unlike the CPI, the PCE includes expenditures from non-profit institutions that serve households.
The Fed has given preference to PCE due to its broader scope and “chained base” for calculations.
The CPI and PCE do not cover identical categories of personal spending. The PCE has a broader scope than the CPI, as it captures the expenditures by both rural and urban consumers. Unlike the CPI, the PCE includes expenditures from non-profit institutions that serve households.
The Fed has given preference to PCE due to its broader scope and “chained base” for calculations.
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