Fed Might Be Winning Inflation Fight, Depending on Index Used

The CPI and PCE indicators could send divergent messages

As inflation climbs in the U.S., rising food and energy costs have pushed the nation’s most popular price index to its highest level in four decades. WSJ’s Gwynn Guilford explains how the consumer-price index works and what it can tell you about inflation. Illustration: Jacob Reynolds

Two measures of U.S. inflation are now telling a similar story. But those measures are likely to diverge this year, with one signaling the Federal Reserve’s work is nearly done and the other suggesting the opposite.

That could make it hard for the Federal Reserve to explain to the public why it is holding interest rates high

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