What is the "market-based" PCE price index?
BEA now prepares supplemental personal consumption expenditures (PCE)
price and quantity indexes that are based on market transactions for which
there are corresponding price measures. Specifically, the price index
provides a measure of the prices paid by persons for domestic purchases
of goods and services, which may be a useful measure of consumer prices
for some analytical purposes.
The index is composed of PCE components that are deflated by either a
detailed consumer price index (CPI) or a producer price index. It excludes
most imputed expenditures, such as services furnished without payment
by financial intermediaries except life insurance carriers, but imputed
space rent for owner-occupied nonfarm housing is included in the index.
(We note that its inclusion improves comparability with the CPI. Owner's
equivalent rent within the CPI is measured by reweighting the renter sample
of market transactions.) It excludes expenses of nonprofit institutions
serving households, most insurance purchases, gambling, margins on used
light motor vehicles, and expenditures by U.S. residents working and traveling
abroad. Household insurance premiums, which are deflated by the CPI for
tenants’ and household insurance, are included in market-based PCE;
medical and hospitalization and income loss insurance, expense of handling
life insurance, motor vehicle insurance, and workers’ compensation
Two price indexes are prepared: An overall market- based PCE measure
and a market-based PCE measure that excludes food and energy. Current-dollar
estimates, chained (2000) dollar estimates, and chained-type price and
quantity indexes are shown as addenda items in the underlying
detail PCE tables on BEA’s Web site.