Abstract

Owen J. Shoemaker "10 Years of Comparative Results: Chained C-CPI-U vs. Regular CPI-U"

In February, 2013, the BLS calculated and published its twelfth annual set of C-CPI-U indexes (for the 12 months of 2011) and its eleventh annual set of C-CPI-U indexes for 12-month price changes. This paper will concentrate on the last ten years of this series. The C-CPI-U (Chained Consumer Price Index – Urban) is calculated and published every year, with a one to two year lag, using a Tornqvist formula, and its set of weights are updated yearly, so that a unique set of monthly weights are available for both time t as well as for time t–n. The C-CPI-U can thus be labeled a “superlative” index. By contrast the Regular CPI-U uses weights that are, at a minimum, at least two years old, and uses a Laspeyres formula as its final high-level estimator. The set of All-US–All-Items Chained C-CPI-U index results continue to diverge – lower, but more slowly – from Regular CPI-U index results. We investigate the nature of this divergence.