Will the PCE-CPI wedge increase in February 2024?
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14
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resolved Mar 29
Resolved
NO

This market is not about whether inflation growth increases, but the difference ("wedge") in the two primary measures of inflation: Personal Consumption Expenditures (PCE) Price Index and Consumer Price Index (CPI).

The PCE Price Index, published by the Bureau of Economic Analysis (BEA), covers all goods and services consumed by households and weights them according to their total expenditure. The Federal Reserve prefers the PCE Price Index when making monetary policy decisions.

The CPI, published by the Bureau of Labor Statistics (BLS), measures the average change over time in the prices paid by urban consumers for a basket of consumer goods and services. Social Security and other government benefits are often adjusted based on CPI measures.

The "wedge" is the difference between PCE and PCI. This market is measuring each as the percent change from February 2023 to February 2024. The corresponding numbers for January 2024 were 3.1% (CPI) and 2.4% (PCE). If the difference between PCE and CPI in February 2024 is greater than 0.7 percentage points, the market will resolve YES. Otherwise, the market will resolve NO (i.e., is the difference is 0.7 or less).

Percentages will be rounded to tenths place. Absolute difference of the two numbers will be used. CPI is using "All items" under "February 2023 to February 2024" from "12-month percent change, Consumer Price Index, selected categories." PCE is using "Price indexes" under "Feb. 2024" from "Percent change from month one year ago." If there is any change in reporting structure or names for either inflation measure, the market creator will use best judgement to select a February year-over-year comparison.

February 2024 CPI data will be released on March 12, 2024, at 8:30 a.m. EDT.

February 2024 PCE data will be released on March 29, 2024, at 8:30 a.m. EDT.


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bought Ṁ2,000 NO

I don't think it will make much of a difference (I expect the increase to be significantly larger than 2–6 bps) but I think it's worth noting that because the two are rounded separately, the unrounded difference only needs to increase by less than 2 bps (0.01207 percentage points, if going to the full 6 s.f.) for the difference to be rounded up to 0.8 pp. YoY PCE can increase by 4.769 bps and still be rounded down.

Odd Lots just had a good episode on this topic

@ahalekelly That was the inspiration for the question!