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A measure of prices for personal consumption expenditures in the United States.
The index combines price movements across many categories, with weights reflecting consumption patterns. Its chain-type construction allows the weighting to evolve rather than holding one basket unchanged indefinitely. Coverage includes some spending on people’s behalf. These features differ from the consumer price index’s methodology, so the two indexes can report different inflation rates without either being a simple error.
Suppose a hypothetical PCE price index rises from 120 to 123 over a year. The price increase is (123 ÷ 120 − 1) × 100 = 2.5%. If nominal consumption expenditure rises by 4% over the same period, that does not mean consumption volume rose by 4%: part of the extra spending reflects higher prices.
U.S. second-quarter GDP growth revised to 2.2% annual rate
U.S. July spending edged up, with little gain after inflation