PCE Price Index MoM

The PCE Price Index MoM tracks monthly percent change in Personal Consumption Expenditures prices. It covers persons resident in the United States, meaning households plus nonprofit institutions serving households. It includes third-party payments and imputations, such as employer-paid health care and owner housing rent estimates. It accounts for about 2/3 of domestic final spending, excluding foreign visitors spending, business purchases, and housing investment.

The Bureau of Economic Analysis publishes the index about 1 month after the reference month ends at 8:30 a.m. Eastern. Each release covers 1 calendar month and appears with income, spending, saving, and detailed PCE tables. Each release carries revised monthly changes, each annual update revises several years, and method changes arrive about every 5 years. Markets read faster MoM growth as stronger monthly inflation, while core change, excluding food and energy, signals underlying trend.

Component prices differ between goods and services, and core excludes volatile food and energy to show the underlying trend.

• Durable goods: Long-lived items such as motor vehicles, furnishings, and recreational goods.
• Nondurable goods: Short-lived items such as food for home use, clothing, gasoline, and other goods.
• Housing and utilities: The largest services block, including imputed rent for owner-occupied homes.
• Health care: Medical services, including employer-paid and government-financed care.
• Financial services and insurance: Bank and insurance services, including services furnished without direct payment.
• Other services: Transportation, recreation, restaurants and hotels, other services, nonprofits, and net foreign travel.

One example shows component divergence from the headline: the index rose 0.1% for the month, with core inflation also up 0.1%. Goods prices fell 0.2% while services prices rose 0.2%, as food rose 0.1% and energy fell 0.8%. After 1 year headline prices rose 2.2% and core 2.7%, with goods down 0.9% and services up 3.7%, food up 1.1% and energy down 5.0%. Services spending rose 54.8 billion led by housing and financial services, while goods spending fell 7.6 billion led by new motor vehicles.

1. Current-dollar spending: Build current-dollar spending for each detailed category from business surveys such as retail and services surveys. In benchmark years allocate domestic supply among buyers and add margins, transport, and taxes.
2. Deflation: Divide each category's current-dollar value by its best matching price index, usually a CPI or PPI. CPI means Consumer Price Index and PPI means Producer Price Index, with the reference year set to 100.
3. Fisher aggregation: Aggregate with the chain-type Fisher price formula using spending weights from the 2 adjacent months. It takes the geometric mean of a Laspeyres change at old prices and a Paasche change at new prices.
4. Monthly change and seasonal adjustment: Convert the Fisher change to MoM percent change as 100 times the index ratio less 1. Seasonally adjust inputs using ready-adjusted data or Census X-13ARIMA software, with factors applying to 5 years at minimum.
5. Illustrative example: For example, 2 items can yield Laspeyres 1.700 and Paasche 1.500, giving Fisher 1.597 and MoM growth of 59.7%. Price growth of 1.597 times quantity growth of 1.127 equals the spending ratio of 1.800.