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The difference between CPI and PCE seemed relatively insignificant. However, a big issue is the difference between CPI and Core CPI. CPI is the consumer price index. A measure of the cost of living for the typical person. Core CPI is the CPI â energy and food prices.
A consumer facing inflation that occurs at the rate of 10% per year will able to buy 10% less goods at the end of the year if his or her income stays the same. Inflation can also be defined as a decline in the real purchasing power of the applicable currency. Consumer Price Index (CPI). The CPI represents prices paid by consumers (or households). Prices for a basket of goods are compiled for a certain base period. Price data for the same basket of goods is then collected on a monthly basis. This data is used to compare the prices for a particular month with the prices from a different time period.