The Personal Consumption Expenditures (PCE) data is a key measure of inflation that tracks changes in the prices of goods and services purchased by consumers. It is reported monthly by the Bureau of Economic Analysis (BEA) and is a critical tool used by the Federal Reserve to assess inflation and guide monetary policy.
There are two main types of PCE data:
1. Headline PCE: This measures the overall change in prices for all goods and services. It includes volatile components like food and energy, which can fluctuate sharply due to supply shocks, seasonal changes, or geopolitical events.
2. Core PCE: This excludes the more volatile food and energy prices to provide a clearer view of underlying inflation trends. Core PCE is the preferred inflation gauge for the Federal Reserve because it gives a more stable picture of long-term inflation pressures.
PCE is similar to the Consumer Price Index (CPI), but PCE is broader in scope and reflects changes in consumer behaviour, such as substituting products when prices rise.
Via the Wall Street Journal, analyst expectations:
This article was written by Eamonn Sheridan at www.forexlive.com.