Four numbers, one page — why all four matter
U.S. inflation is reported by two separate federal statistical agencies using two different methodologies. BLS publishes CPI using a relatively fixed consumption basket and a monthly retail price survey. BEA publishes PCEusing national accounts data and a chain-weighted formula that re-balances the basket as consumers substitute away from goods that get expensive. PCE consistently prints 0.2 to 0.5 percentage points below CPI for that reason — and that's before the "core" cut strips out food and energy volatility.
The four cards above are the four numbers every macro analyst tracks. Headline CPI is the journalism headline and the trigger for Social Security cost-of-living adjustments. Core CPI is the workhorse for real-time policy commentary. Headline PCE is the headline number BEA highlights. Core PCE is the Federal Reserve's actual 2% inflation target— when FOMC members say "inflation," this is the series they mean.
How to read these numbers in real time
Inflation pages are full of one-month-noise stories. CalcFi shows year-over-year for a reason: month-on- month changes are dominated by seasonal patterns and short-term volatility, while YoY compresses the signal you actually care about — is the price level higher or lower than a year ago, and by how much. The Fed's 2% target is a YoY target on core PCE; a reading of 3.0% means core consumer prices are running 1.0 percentage point above target.
A few rules of thumb. Headline CPI above 4% YoY is widely felt by households — that's the threshold where consumer survey sentiment cracks. Core PCE above 3% YoY keeps the Fed in restrictive territory. Core PCE below 2.5% YoY is when rate cut probabilities start to crystallize in fed funds futures pricing. None of this is investment advice — it's a description of how policy reaction functions empirically work.
How inflation connects to the rest of the macro picture
Inflation is the denominator for nearly everything. It's why our real wage tracker divides BLS average hourly earnings by CPIAUCSL — when CPI prints hot, real wages fall even when nominal wages are growing. Inflation pulls hard on the trackers above it too: the energy basket inside CPI moves with retail gasoline, which moves with crude oil on a two-to-three week lag. Shelter — the single largest line in the CPI basket — moves with home prices and rents that you can track on our rent vs. home values index.
Federal Reserve policy is the closing loop. When core PCE is far above 2%, the Fed holds the federal funds rate above the neutral rate to slow demand. See the live rates dashboard for the current fed funds rate, 10-year treasury, and mortgage rates — all three sit on top of the core PCE story.
Caveats
These are seasonally adjusted, but not for all the things people would like them adjusted for. Owners' equivalent rent (OER), the imputed cost of homeownership, is roughly a quarter of CPI by weight and lags actual market rents by 12–18 months. So a CPI print can stay elevated months after the housing market has cooled. PCE weights are also re-benchmarked annually with revisions back five years — the latest number you see today may shift slightly when the annual revision lands every July.