PCE price index
The Commerce Department's price index for consumer spending, which the Federal Reserve uses as its primary inflation gauge.
The personal consumption expenditures price index is published by the Bureau of Economic Analysis as part of the personal income and outlays report. It measures prices for what households spend on, and its weights update as consumers switch products. The Federal Reserve's 2 percent inflation target is defined on this index.
On our site, PCE is shown monthly with a year-over-year rate. It is released after CPI and is often revised when later data arrive.
Traders care because it is the index the Fed targets, so it feeds directly into policy expectations. Its scope is broader than CPI, so the two can diverge.
Worked example (illustrative numbers, not real data): PCE inflation runs at 2.5 percent year over year against a 2 percent target. The 0.5-point gap is the figure policymakers watch when judging whether to cut. A print revised up the following month can change that judgment.