Comparison of the Personal Consumption Expenditures (PCE) Price Index
with the Consumer Price Index (CPI)
Quarterly Summary
The PCE price index (line 1) increased 3.5 percent at an annual rate in the first quarter of 2008, and the CPI (line 37) increased 4.3 percent – a difference of 0.8 percentage point. The difference primarily reflects contributions of the formula effect (+0.22 percentage point, line 2) and the weight effect (+0.56 percentage point, line 13). The net scope effect (line 27 minus line 21) contributed -0.05 percentage point, while “other” effects (line 31) contributed 0.13 percentage point.

The largest contributors to the formula effect were gasoline and oil (0.08 percentage point, line 3) and “other” (0.06 percentage point, line 11). The largest contributors to the weight effect were owner-occupied nonfarm space rent (0.36 percentage point, line 15) and gasoline and oil (0.30 percentage point, line18), partly offset by contributions from "other" (-0.34 percentage point, line 20). The contributions to the scope effect for CPI items out-of-scope of the PCE index (0.21 percentage point, line 27) were more than offset by the contributions to the scope effect for PCE items that are out-of-scope of the CPI (-0.26 percentage point, line 21). Within “other” effects, price differences for airline transportation services (line 35) contributed 0.08 percentage point, and differences in seasonal adjustment (line 32) contributed 0.06 percentage point.


The NIPA data on this page were published on May 01, 2008
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Notes: These notes provide a brief explanation of the terminology used in the table. For additional information, see the article “Comparing the Consumer Price Index and the Personal Consumption Expenditures Price Index” in the November 2007 Survey of Current Business or at http://www.bea.gov/scb/pdf/2007/11%20November/1107_cpipce.pdf .

Formula effect: The PCE price index is based on a Fisher-Ideal index formula, while the CPI is based on a modified Laspeyres index formula. To account for this difference, the formula effect estimates the percentage-point difference in growth rates between the PCE price index and BEA’s fixed-weight PCE price index.

Weight effect: The relative weights assigned to the detailed item prices in the CPI are based primarily on household surveys, while the relative weights used in the PCE price index are based primarily on business surveys. The weight effect estimates the percentage-point contribution to the growth in the fixed-weight PCE price index that can be accounted for by weight differences for comparable PCE price index and CPI items.

Scope effect: The PCE price index is based on goods and services purchased by individuals and by nonprofit institutions within the framework of the NIPAs, while the CPI is based on the out-of-pocket expenditures of all urban households. Therefore, some items in the PCE price index are not within the scope of the CPI, and some items in the CPI are not within the scope of the PCE price index. The scope effect has two parts: The first part estimates the percentage-point contribution to growth in the PCE fixed-weight price index for items not included in the CPI; the second part estimates the percentage-point contribution to growth in the CPI for items not included in the PCE price index.

Other effects: The remaining differences between the PCE price index and the CPI include seasonal adjustment differences, price differences for gasoline and airline transportation, and "other" differences; the last calculated as a residual to balance the reconciliation.

  CPI Consumer price index
  PCE Personal consumption expenditures


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