Personal consumption expenditures price index

When you want to buy something at the store, you have to pay money for it, right? And the more things you buy, the more money you have to spend. The same is true for the government when they buy things, like roads and schools or for businesses when they buy things to make products.

The government pays attention to something called the Personal Consumption Expenditures Price Index (PCE) to see how much the prices of goods and services (stuff you buy) are going up or down. It's like a special tool they use to keep track of how much it costs people and businesses to buy things over time.

The PCE looks at the prices of lots and lots of different things that people and businesses buy, like food, clothes, cars, and even haircuts. Then it puts all of those prices together and finds out how much they change over time. For example, if something used to cost $10 last year but this year it now costs $11, then that thing has gone up in price by 10%.

The PCE helps the government see if prices are going up or down, and how fast they are changing. This helps them make decisions about things like how much money to print or how much to spend on certain programs. It also helps businesses make decisions about things like how much to charge for their products.