Core PCE
The PCE price index excluding food and energy, the inflation measure the Federal Reserve watches most closely.
Core PCE excludes food and energy from the personal consumption expenditures price index. It is the version of the Fed's target measure that policymakers most often cite when describing underlying inflation. Like headline PCE, it is published by the Bureau of Economic Analysis and revised in later releases.
On our site, core PCE is shown with its year-over-year rate and its monthly change. Compare it with core CPI: the two usually move together but can differ in size.
Traders care because core PCE drives policy expectations, often more than core CPI does. Revisions can change the picture of trend inflation.
Worked example (illustrative numbers, not real data): core PCE rises 0.3 percent in a month and is 2.8 percent higher than a year earlier. If the prior month is revised up by 0.1 point, the recent trend looks firmer, which can shift expectations for the next rate decision.