Here’s how the Federal Reserve determines the inflation rate
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The Consumer Price Index tracks the average price change over time for a “basket” of goods and services. The CPI takes into account things like food, transportation and health care. If the CPI goes up, that’s considered an indication that the inflation rate is rising. But when the Federal Reserve calculates the inflation rate, it relies on something called the core PCE, the personal consumption expenditures price index. Why use a different measure?
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