Fun Fact of the Day, August 16, 2019

August 16, 2019

What The Fed Uses - The government measures inflation in 8 major categories and then weights them to produce an overall CPI total. The largest weighting in the CPI market basket is “housing” (42%) while “medical care” makes up only 8% of the index. The Federal Reserve prefers to measure inflation using the PCE index, i.e., “personal consumption expenditures.” “Housing” is given a 24% weighting in the PCE index while “medical care” makes up 22% of the PCE index. The consumer price index (CPI) and the PCE index are measurements of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).

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