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Personal consumption expenditures price index
 
 
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The PCE price index (PCEPI) (or PCE deflator, PCE price deflator, Implicit Price Deflator for Personal Consumption Expenditures (IPD for PCE) (by the BEA
Bureau of Economic Analysis

The Bureau of Economic Analysis is an agency in the United States Department of Commerce that provides important economy of the United States statistics including the gross domestic product of the United States....
), Chain-type Price Index for Personal Consumption Expenditures (CTPIPCE) (by the FOMC
Federal Open Market Committee

The Federal Open Market Committee , a component of the Federal Reserve System, is charged under United States law with overseeing the nation's open market operations....
 )) is a United States-wide indicator of the average increase in prices for all domestic personal consumption.






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The PCE price index (PCEPI) (or PCE deflator, PCE price deflator, Implicit Price Deflator for Personal Consumption Expenditures (IPD for PCE) (by the BEA
Bureau of Economic Analysis

The Bureau of Economic Analysis is an agency in the United States Department of Commerce that provides important economy of the United States statistics including the gross domestic product of the United States....
), Chain-type Price Index for Personal Consumption Expenditures (CTPIPCE) (by the FOMC
Federal Open Market Committee

The Federal Open Market Committee , a component of the Federal Reserve System, is charged under United States law with overseeing the nation's open market operations....
 )) is a United States-wide indicator of the average increase in prices for all domestic personal consumption. It is indexed to a base of 100 in 1992. Using a variety of data including U.S. Consumer Price Index and Producer Price Index prices, it is derived from the largest component of the Gross Domestic Product
Gross domestic product

File:GDP nominal per capita world map IMF 2008.pngThe gross domestic product or gross domestic income is one of the measures of national income and output for a given country's economy....
 in the BEA's National Income and Product Accounts
National Income and Product Accounts

National Income and Product Accounts use double-entry accounting to report the monetary value and sources of output produced in a country and the distribution of incomes that production generates....
, personal consumption expenditures.

The less volatile measure of the PCE price index is the core PCE price index which excludes the more volatile and seasonal food
Food

Food is any substance, usually composed of carbohydrates, fats, proteins and water, that can be Eating or Drinking by an animal or human for nutrition or pleasure....
 and energy
Energy

In physics, energy is a scalar physical quantity that describes the amount of Work_ that can be performed by a force. Energy is an attribute of objects and systems that is subject to a conservation law....
 prices.

In comparison to the headline United States Consumer Price Index, which uses one set of expenditure weights for several years, this index uses a Fisher Price Index, which uses expenditure data from both the current period and the preceding period. Also, the PCEPI uses a chained index which compares one quarter's price to the last quarter's instead of choosing a fixed base. This price index method assumes that the consumer has made allowances for changes in relative prices
Relative price

Relative price is the price of a commodity such as a Good or Service in terms of another; ie, the ratio of two prices. A relative price may be expressed in terms of a ratio between any two prices or the ratio between the price of one particular good and a weighted average of all other goods available in the market....
. That is to say, they have substituted
Substitute good

In economics, one kind of Good is said to be a substitute good for another kind in so far as the two kinds of goods can be consumed or used in place of one another in at least some of their possible uses....
 from goods whose prices are rising to goods whose prices are stable or falling.

The PCE rises about 1/3% less than the CPI, a trend that dates back to 1992. This may be due to the failure of CPI to take into account substitution. Alternatively, an unpublished report on this difference by the BLS
Bureau of Labor Statistics

The Bureau of Labor Statistics , a unit of the United States Department of Labor, is the principal fact-finding agency for the government of the United States in the broad field of labor economics ....
 suggests that most of it is from different ways of calculating hospital expenses and airfares.

Federal Reserve

In its "Monetary Policy Report to the Congress
Monetary Policy Report to the Congress

The Monetary Policy Report to the Congress is a semi-annual report prepared by the Board of Governors of the Federal Reserve and presented to the Congress of the United States....
" ("Humphrey-Hawkins Report
Humphrey-Hawkins Full Employment Act

The Full Employment and Balanced Growth Act , is an act of federal legislation by the United States government....
") from February 17, 2000 the FOMC said it was changing its primary measure of inflation from the consumer price index
Consumer price index

A consumer price index is a measure of the average price of consumer goods and services purchased by households. It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer....
 to the "chain-type price index for personal consumption expenditures".

See also

  • Price index
    Price index

    A price index is a normalized average of prices for a given class of Good s or Service s in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations....
  • Consumer price index
    Consumer price index

    A consumer price index is a measure of the average price of consumer goods and services purchased by households. It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer....
  • Gross domestic product deflator (IPD for GDP)
  • Household final consumption expenditure
    Household final consumption expenditure

    Household final consumption expenditure is a price index which represents consumer spending. It consists of the expenditure, including imputed expenditure, incurred by resident households on individual consumption goods and services, including those sold at prices that are not economically significant....
     (HFCE)
  • Inflation
    Inflation

    In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
  • Personal Consumption Expenditure
    Personal Consumption Expenditure

    The Personal Consumption Expenditure is the component statistic for consumption in Gross domestic product collected by the Bureau of Economic Analysis....


External links


Data

    • (the core CPI as a comparison)
  • (click on "Personal Income and Outlays", then skip to Tables 9 and 11 near the bottom.)


Articles