Monthly, around 30 days after the month end
The Personal Consumption Expenditures Index (PCE Index) or PCE Deflator is produced by the Bureau of Economic Analysis (BEA) to accompany the National Income Accounts for Personal Consumption Expenditures. The accounts measure personal consumption spending within the United States and therefore have a significant impact on the GDP rate within the world’s largest economy.
Personal Expenditure is the major component of household consumption which is the biggest explanatory factor determining GDP in the USA (the other’s being investment, government expenditure and net exports).
The PCE index calculates the change in the prices paid by consumers and non-profit organisations on consumption goods and acts as an alternative to the Consumer Prices Index (CPI) as a measure of inflation. It generally displays a lower rate than CPI due to differences in formula and scope between the two measures.
In contrast to the CPI Index, PCE is calculated using a ‘Chained Fisher Index’ which uses business surveys from the previous two years to derive weighting, instead of the household survey’s ‘weighted basket of goods’ technique employed by CPI.
This means that the PCE adjusts quicker to changing spending patterns and is more likely to capture the effect of consumers substituting premium products for budget ones in tougher times whereas the CPI Index contains a more rigid set of goods that are only re-calculated when the basket is updated every two years.
Core’ PCE is also released at the same time and excludes the highly volatile components of food and energy.