What is Core PCE — Core Personal Consumption Expenditures Price Index?
Core PCE is the Personal Consumption Expenditures price index excluding food and energy. It is the single inflation measure the Federal Reserve most closely tracks when setting monetary policy and evaluating progress toward its 2% inflation target.
Live data: Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index)
Federal Reserve Economic Data (FRED) — · Monthly · 146 observations
Most recent observation: 128.86 Index 2017=100 as of February 1, 2026.
Understanding Core PCE
Core PCE is the single most important inflation number in U.S. monetary policy. The Federal Reserve's 2% inflation target is defined explicitly in terms of core PCE, and every FOMC statement is framed around whether core PCE is moving toward or away from that target.
Core PCE strips food and energy from the broader PCE index, for the same reason core CPI strips them from CPI — to filter out volatile components and reveal the underlying trend. The result is a slow-moving, persistent gauge of how fast prices are rising across the services and non-food-non-energy goods that dominate U.S. consumption.
Each monthly core PCE release is scrutinized for whether the 3-month, 6-month, and 12-month trends are accelerating, decelerating, or stable. The Fed's reaction function weights recent readings heavily — a single surprising print can move federal funds futures and Treasury yields by double digits of basis points.
How Core PCE is calculated
Core PCE uses the full PCE methodology — chain-weighted aggregation of hundreds of spending categories — with food and energy components zeroed out. Because PCE's healthcare weight is higher than CPI's, medical-services price change carries more influence in core PCE than in core CPI.
Historical context
Core PCE has been tracked since 1959. Notable episodes include the late-1970s peak above 9%, the great moderation's 1.5–2.5% range, the 2021–22 surge to a peak of 5.6% year-over-year in February 2022, and the gradual decline through 2023–24 back toward 2%.
Frequently asked questions
What does the Fed consider 'on target' core PCE?
The FOMC targets 2% core PCE inflation symmetrically over the medium term. Single-month readings can be above or below 2%; what matters is whether the trend is heading toward 2% and whether expectations remain anchored there.
Why not target headline PCE?
Headline PCE includes food and energy, which are volatile and driven by supply shocks monetary policy can't address. Targeting core PCE lets the Fed react to persistent, demand-driven inflation rather than chasing oil-price swings.