The Fed's Preferred Inflation Gauge Inflation remains a hot topic, directly impacting everything from your grocery bill to interest rates. As of August 2025, two key inflation gauges — the Personal Consumption Expenditures (PCE) Price Index and the Consumer Price Index (CPI) — show that prices are still above the Federal Reserve's 2% target, with the core PCE at 2.9% and core CPI at 3.1%. The Fed is on record as using PCE data as its primary inflation gauge, with a 2% target rate. Elsewhere, the Fed has str ...