Price Level

The personal consumption expenditures price index (PCEPI) is constructed by the Bureau of Economic Analysis. It measures the prices people pay when buying goods and services in the United States. Economists generally prefer the PCEPI to other measures of the price level because it considers a wide range of consumer expenses while also reflecting changes in consumer behavior. Other measures of the price level, like the consumer price index (CPI), do not reflect changes in consumer behavior.

The PCEPI presented above uses August 2025 as the base period. Each observation is expressed as a percent of the observation in August 2025. For example, the price level in November 2025 was 100.6—or, 0.6 percent higher than it had been in August 2025.

In August 2025, the Federal Reserve revised its monetary policy framework. It has indicated that “inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory maximum employment and price stability mandates.”

With this in mind, we have presented the price level alongside a 2-percent growth path, which reflects what the level of prices would be if inflation had averaged 2 percent since August 2025. For example, in November 2025 the 2-percent growth path was 100.5, meaning that the price level would have been just 0.5 percent higher in November 2025 than it had been in August 2025 had inflation equaled 2 percent over the period.

The difference between the price level and the 2-percent growth path is expressed in percentage points and indicates how much higher the price level is relative to what it would have been if prices had merely grown by 2 percent over the period. For example, in November 2025,  the price level was 100.6 - 100.5 = 0.1 percentage points higher than it would have been with 2 percent inflation.