Why the Fed Keeps Missing with Its Favorite Inflation Gauge

Inflation Explained with Fexingo: CPI, Prices, and the Cost of Living for Everyday People · May 31, 2026 · 8m · transcript

The Fed’s preferred inflation measure, Core PCE, came in at 3.3% annualized in April 2026. Lucas and Luna dig into why the Fed keeps leaning on PCE even as CPI tells a different story — and why that gap matters for your wallet. They unpack the statistical quirks: how PCE accounts for substitution effects, why it weights medical costs differently, and how the Iran conflict is gumming up energy components. With the Fed funds rate stuck at 3.62% and core inflation stubborn, the hosts ask whether the central bank is looking at the right number at all. Plus, a quick word on listener support…