The Consumer Price Index measures the average change over time in the prices paid by urban consumers for a representative market basket of consumer goods and services, including food, energy, housing, apparel, transportation and medical care. In the United States it is compiled monthly by the Bureau of Labor Statistics from roughly 94,000 monthly price quotations collected from about 6,000 housing units and 22,000 retail establishments across urban areas, with the CPI-U (all urban consumers) and CPI-W (urban wage earners and clerical workers) as its two main variants alongside a chained version, C-CPI-U. First calculated in a systematic form during World War I to help set wage adjustments, the CPI is the most widely cited US inflation gauge, used to index Social Security benefits, federal tax brackets and many private wage and rent contracts, and equivalent national CPIs are compiled by statistical agencies worldwide, such as Eurostat's Harmonised Index of Consumer Prices for the European Union.
Facts
Classification
Release FrequencySourced to the subject's own account Timing Class Geography
Geographic ScopeUnited States (U.S. Bureau of Labor Statistics) 3 In the Other Atlases
Sources
1. Consumer price index (Wikipedia)
WikipediaWikipedia, "Consumer price index", lead section
A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. It is calculated as the weighted average price of a market basket of consumer goods and services.
Introduction, frequency
In the United States it is compiled monthly by the Bureau of Labor Statistics from roughly 94,000 monthly price quotations collected from about 6,000 housing units and 22,000 retail establishments across urban areas, with the CPI-U (all urban consumers) and CPI-W (urban wage earners and clerical workers) as its two main variants alongside a chained version, C-CPI-U.
View the Source 2. US Leading Indicators (The Conference Board)
3. U.S. Bureau of Labor Statistics
Wikipedia: Boskin Commission
Wikimedia FoundationWikipedia, "Boskin Commission", paragraph beginning "The report highlighted four sources of possible bias", first bulletQuote, Wikipedia, "Boskin Commission", paragraph beginning "The report highlighted four sources of possible bias", first bullet
Substitution bias occurs because a fixed market basket fails to reflect the fact that consumers substitute relatively less for more expensive goods when relative prices change.
Dissenting Readings (1 dissenting reading)
Description
The 1996 Boskin Commission, a US Senate-appointed panel chaired by economist Michael Boskin, concluded that the CPI as then measured overstated annual US inflation by about 1.1 percentage points in 1996 and about 1.3 points in earlier years. The commission attributed this to four measurement biases in the fixed market basket methodology: substitution bias (the index does not reflect consumers shifting toward relatively cheaper goods as relative prices change), outlet substitution bias (shifts to lower-price retailers are not properly captured), quality change bias, and new product bias. The finding mattered beyond methodology because CPI indexes federal Social Security and other benefit payments, so an overstated CPI was estimated to add materially to projected federal deficits and debt.
A dissenting reading, from Boskin Commission (Advisory Commission to Study the Consumer Price Index)Wikipedia: Boskin Commission, Wikimedia Foundation
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