PCE

Goods inflation has slowed down a lot over the last year, thanks in part to higher interest rates. But the Federal Reserve is having a harder time slowing services inflation.

Businesses have been finding ways to absorb wage increases without charging customers more.

So far, price increases have not driven customers away. But there’s evidence that is starting to change.

The personal consumption expenditures price index, better known as the PCE, tracks what we paid for goods and services in the previous month.

When we focus on recent months rather than year-on-year increases, inflation numbers look pretty good, says economist Alan Blinder.

Though the Federal Reserve's actions are being felt throughout the economy, stabilizing prices could take 12 to 18 months.

The PCE and CPI measure different things, but the message they send to consumers may influence expectations — that then can affect inflation.

For monetary officials, the personal consumption expenditures gauge beats the CPI. A trip to the grocery store helps explain why.

"A look at the record shows that the Fed often stumbles in its efforts to save the day," says Ben White, chief economic correspondent at Politico.

The Fed's preferred means of measuring inflation jumped 0.6% in October.