What is the difference between CPI and PCE?

CPI is an abbreviated form of Consumer Price Index, while PCE means Personal Consumption Expenditures. Both terms are employed in measurement and determining consumer inflation. Personal Consumption Expenditures can simply be explained as the measure of price changes in goods and consumer services. It is an attempt to determine or measure both the actual and accounted expenditure of a household. Consumer Price Index is mainly and usually directed to individuals.

CPI is the measure of the change observed in the ability of an average family in purchasing, simply put, Consumer Price Index of an average family is the change in the purchasing ability or power of that family. Consumer Price Index rate of inflation is calculated by drawing a comparison between the CPI of a month with the CPI of the following month during the past year. Consumer Price Index majorly deduces the price changes with respect to the coat of living.