Personal Consumption Expenditures (PCE) measures all goods and services bought by U.S households. This is different from the Consumer Price Index (CPI). CPI is the “Inflation number” you hear in the news.

Friday the PCE numbers will be released. Currently at 3% and may decline to 2.8% to 2.9%.

PCE gives a more inclusive look at all products and services from Urban and Rural consumers. CPI looks at Urban consumers only.

For example, both CPI and PCE measure the price of airfare, but CPI calculates it using a fixed basket of air routes, while PCE calculates it using data on airline passenger revenues and passenger miles traveled.

The key here is CPI excludes a vast amount of Data where PCE tries to grab as much information as possible. What is interesting and shown on the bottom graph, the numbers are pretty close.