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 .
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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.
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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.
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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.
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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.
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CPI Consumer price index PCE Personal consumption expenditures
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