NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Constructing a PCE-Weighted Consumer Price Index

Caitlin Blair

Chapter in NBER book Improving the Measurement of Consumer Expenditures (2015), Christopher Carroll, Thomas Crossley, and John Sabelhaus, editors (p. 53 - 74)
Conference held December 2-3, 2011
Published in May 2015 by University of Chicago Press
© 2015 by the National Bureau of Economic Research
in NBER Book Series Studies in Income and Wealth

This study investigates the effects of simulating the Consumer Price Index (CPI) with alternately sourced weights on the inflation experience for an average US consumer. The Bureau of Labor Statistics currently uses household spending data from the Consumer Expenditure (CE) Survey to construct expenditure category weights, or "item" weights, in the CPI. The Bureau of Economic Analysis also estimates consumer expenditures, but does so at a national level for publication of Personal Consumption Expenditures (PCE) in the National Income and Product Accounts. In this chapter, 2005-2010 price indexes that utilize PCE weights instead of CE expenditure weights are compared with the CPI-Urban in order to evaluate current CPI weighting methods. These comparisons show that the annualized growth rate over five years of an adjusted PCE-weighted CPI is slightly lower than that of the CPI-U, while a reweighted index that uses PCE expenditure definitions grows much more quickly than the CPI.

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This paper was revised on July 16, 2014

Machine-readable bibliographic record - MARC, RIS, BibTeX

This chapter first appeared as NBER working paper w19582, Constructing a PCE-Weighted Consumer Price Index, Caitlin Blair
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