A Tale of Two Indexes: Which Inflation Metric Should You Trust?

AI Briefing

• – The Personal Consumption Expenditures (PCE) price index is considered a more accurate measure of inflation than the Consumer Price Index (CPI). The PCE index includes a broader range of goods and services, including healthcare and housing costs, which are not fully captured by the CPI. The Federal Reserve uses the PCE index to set monetary policy, as it is seen as a more comprehensive indicator of inflationary pressures.