Inflation releases: the CPI and the PCE price index

Why it matters

Kitalpha’s calendar records the newest consumer price index release: U.S. Bureau of Labor Statistics published the figure for August 2026 on 2026-09-11 at 08:30 EDT. The indicator record holds the index behind it, and from two of its levels the headline twelve-month rate is 3.71%. Later in the month a second agency publishes a second gauge, the PCE price index, with a rate of its own. A headline that says “inflation” rarely says which of the two it means, or whether it means the headline rate or the core rate. This lesson teaches how to tell.

The concept

An inflation release is a statistical agency’s monthly report on a price index: the cost of a basket of goods and services relative to a base period set equal to 100. The index is a level. The release states how much that level changed over the latest month and over the latest twelve months; both are rates of change, and the twelve-month one is what most headlines call “inflation”.

The United States has two gauges of consumer prices, from two agencies. The consumer price index, the CPI, comes from the Bureau of Labor Statistics. It prices a basket of what urban households purchase, each item weighted by its share of household spending, with the shares held fixed for a period and then updated. The PCE price index, where PCE stands for personal consumption expenditures, comes from the Bureau of Economic Analysis, inside its monthly report on personal income and spending. It covers a wider set of spending, including what is paid on households’ behalf, such as medical care paid by employers and government programmes, and its weights move every month as spending shifts. The Federal Open Market Committee states its inflation objective in terms of the PCE price index.

Because the baskets, weights and formulas differ, the two rates for the same month differ. Housing carries a larger share of the CPI basket, medical care a larger share of the PCE basket, and when households shift toward what has become relatively cheaper the PCE weights follow while the CPI weights stay fixed for the period. Neither number is wrong; each measures what it was built to measure.

Each gauge is published in two versions. The headline rate covers all items in the basket. The core rate leaves out food and energy, two groups whose prices swing from month to month for reasons, such as harvests, weather and fuel supply, that say little about the broader trend. Core is a subset, not a correction: food and energy prices are measured as carefully as everything else, and households pay them all the same. A reader looking for the underlying trend reads the version that leaves the swings out. So one month’s releases carry four rates, headline CPI, core CPI, headline PCE and core PCE, and a figure is comparable only with the same rate from the same gauge in an earlier month.

One reading error runs through all four. Every one of them is a speed at which the level rose. When a positive rate comes down from one release to the next, prices are still rising, only more slowly; prices fall only when a rate is below zero. “Inflation came down” and “prices came down” describe different things.

On Kitalpha the release and the index sit in two places. The calendar row records who published what, for which reference period, at what time, with the impact tier the site assigns from Treasury moves on past release days, which Lesson 6 explains; the row carries no value and no expected figure, and its consensus line says so. The rates live on the indicator record, month by month. The table below lists the row’s fields for the newest CPI release. Look for which gauge and which agency it names, and notice that no row carries a rate or an expectation.

Worked example

Take the two records from the opening. The calendar row records that U.S. Bureau of Labor Statistics (BLS) published the consumer price index for August 2026 on 2026-09-11; the indicator record holds the index levels, the latest as of 2026-08-01. The steps below read the latest level, the level a month earlier and the level twelve months earlier, then compute the two rates a consumer price release states: the one-month change and the twelve-month change, both for all items. Every figure is taken from the named record on the date shown.

Read the steps in order. The first, second and fourth lines are levels, in index points relative to a base period of 100. The third is the one-month change, a speed over one month; the fifth is the twelve-month change, the headline rate of this gauge. Both are all-items figures from the Bureau of Labor Statistics. The core CPI rate, which leaves food and energy out, is a different number from the same release, and the two PCE rates are different numbers from a different agency. When a headline quotes “inflation”, the fifth line is usually what it means, and it is the only one of the four rates this record can produce, because the indicator record holds the all-items index alone.

Faded example

Now the second record: the PCE price index from the Bureau of Economic Analysis, with its latest level as of 2026-07-01. The two levels are given below. Complete the last step yourself: the headline twelve-month rate of this gauge, in percent to two decimals. Then reveal the answer and set it beside the fifth line of the worked example: two headline rates, one from each gauge, that differ by construction.

Retrieval check

Mark your confidence before each answer. Every option carries an explanation; read the ones you rejected too, because the distractors are the errors this lesson is about.

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