Different baskets answer different questions
The Consumer Price Index (CPI) follows prices for goods and services bought by consumers in its covered population. The personal consumption expenditures (PCE) price index follows prices for a broader set of consumption expenditures, including purchases made on behalf of households. Health care paid by an employer or government program is one reason their scopes differ.
The measures also use different spending weights and index formulas. CPI weights draw on consumer expenditure information; PCE weights use national-accounts consumption spending and can change as spending patterns change. A difference between their inflation readings is not automatically a mistake in either series.
Headline, core and timing
Headline indexes include food and energy. Core versions exclude those categories under each program’s definition. Exclusions can help analysts examine less volatile movements, but food and energy still affect household costs. A core reading is not the inflation rate of a household that buys no food or fuel.
A monthly change and a twelve-month change describe different intervals. Keep adjustment consistent within each ratio. On this site, the default CPI twelve-month view uses unadjusted observations; the separate monthly CPI view can use the adjusted series. PCE views clearly retain the BEA adjustment basis.
Revisions matter
PCE is part of national accounts and its history can change when accounts are updated. CPI-U unadjusted indexes generally are not revised routinely, while seasonally adjusted history can be updated with revised seasonal factors. Do not apply one program’s revision policy to every price index.
For a report, record the exact series code, adjustment, reference month, transformation and snapshot date. Use CPI and PCE side by side to understand their different scopes, rather than silently swapping one for the other in a historical calculation. The comparison workspace retains separate panels and labels.