The personal consumption expenditures price index—better known as the PCE index—jumped 5.7% in November from a year earlier. The increase was the highest since 1982.
Part of the jump was due to gasoline prices, which have since tempered but were up sharply in November. The core index—stripped of food and fuel prices—also increased sharply, to 4.7%.
While high, economists are predicting that inflation is nearing its peak. In November, prices rose at a slightly slower pace than October—0.6% versus 0.7%. Excluding volatile food and energy costs, prices rose 0.5%, unchanged from the prior month.
The PCE measures the prices that people living in the United States pay for goods and services. The PCE price index is the Federal Reserve’s preferred inflation gauge, capturing price and consumer spending trends across a wide range of consumer expenses and reflecting changes in consumer behavior. The print is published each month by the Bureau of Economic Analysis (BEA) to track spending and inflation.
While the consumer price index, the CPI, is more widely known as an inflation gauge, price data for the PCE index comes from surveys of businesses, rather than what consumers say they’re spending on goods and services. Other notable differences include a regular change in the PCE’s basket of goods and services to account for substitution—when prices for one item rise, consumers shift their spending to cheaper alternatives. The PCE also measures spending on medical insurance by employers or government programs.
