The trend over time.
What Core PCE Inflation measures.
The year-over-year percentage change in the Personal Consumption Expenditures price index excluding food and energy, from the Bureau of Economic Analysis. The Fed's 2% target is defined on headline PCE; core is watched as the guide to where headline inflation is heading.
Core strips out the most volatile prices to show the underlying trend. PCE weights spending differently than CPI, with less weight on housing, so the two measures can differ by a few tenths of a point.
Why it matters.
This number directly affects your purchasing power and the Fed's decisions on interest rates, which influence your mortgage, auto loan, and savings account returns. Persistent inflation above target makes the central bank more likely to keep rates elevated, which can slow wage growth and job creation while making borrowing more expensive.