The Growing Gap Between Core CPI and Core PCE

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The Growing Gap Between Core CPI and Core PCE

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In this episode of The Macro Memo, Lucas and Luna dig into the widening divergence between core CPI and core PCE inflation. Core CPI hit 336.1 in May, up 3.4% year-over-year, while core PCE sits at 130.1 with a 2.8% annual rate. Lucas explains why the Fed focuses on PCE — it accounts for substitution effects and covers more goods — and why the gap matters for rate expectations. They discuss what the data means for the Fed's next move as the effective fed funds rate holds at 3.63% and the 10-year breakeven inflation dips to 2.20%. A tight episode for anyone tracking the real inflation picture beyond the headlines. #CoreCPI #CorePCE #InflationGap #FederalReserve #MonetaryPolicy #FedFundsRate #BreakevenInflation #ConsumerPriceIndex #PersonalConsumptionExpenditures #USInflation #Economics #MacroMemo #FexingoBusiness #BusinessPodcast #DailyEconomics #LucasAndLuna #InflationData #RateCuts Keep every episode free: buymeacoffee.com/fexingo

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