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Consumer Price Index

How does the C-CPI-U differ from the CPI-U?

Both the C-CPI-U and the CPI-U use the same elementary price indexes as inputs. The differences between the two measures are a result of different upper level aggregation formulas and different expenditure weights (C-CPI-U weights are updated monthly and the CPI-U weights are fixed for a two year period).

The use of a superlative formula (Tornqvist) for upper-level aggregation, used in the final C-CPI-U, is designed to address consumer substitution across item categories. In contrast, the CPI-U uses a formula (Lowe) that assumes consumers do not substitute across item categories. Information on the Tornqvist and Lowe formulas is available in the CPI section of the BLS Handbook of Methods.

In general, the C-CPI-U and the CPI-U will diverge to the extent that:

1. Component elementary indexes have rates of price change that differ from each other, and

2. Expenditure shares reflect a shift in consumer purchases. For example, if consumer purchase chicken instead of steak when the price of steak rises.

Consequently, when there is more variation in price movement among elementary indexes, there is more room for divergence of these two indexes.

How were C-CPI-U weights affected by the COVID-19 pandemic?

The relative importance (weight) of a component is its expenditure weight expressed as a percentage of all expenditures. Changes to relative importances can therefore be caused by changes in expenditures on a given component as well as changes to total expenditures.

Many changes to expenditure weights in the first half of 2020 were likely a result of the COVID-19 pandemic. Several notable expenditure categories are included in the table below (see table 1). Total expenditures by the U.S. urban population declined 6.2 percent in March 2020, 16.8 percent in April 2020, 11.1 percent in May 2020, and 6.1 percent in June 2020 compared to the previous year.

Table 1. C-CPI-U relative importance data, selected categories, January 2020 - June 2020
Item category CPI-U relative importance data (2017-2018 weights) C-CPI-U Relative Importance Data (monthly weights)
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

Gasoline (all types)

3.362 2.970 2.690 2.505 2.440 2.423 2.575

Airline fares

0.786 0.902 0.637 0.489 0.021 0.056 0.126

Other lodging away from home including hotels and motels

0.807 0.787 0.732 0.772 0.079 0.177 0.575

Food away from home

6.191 6.127 6.702 3.990 2.786 3.103 3.485

Food at home

7.579 7.693 8.319 9.585 9.237 9.376 7.563

Household paper products

0.221 0.243 0.249 0.424 0.203 0.209 0.165

Haircuts and other personal care services

0.666 0.583 0.469 0.341 0.291 0.336 0.429

Note: BLS publishes relative importance data for the CPI-U once a year, using December data. Additional details including relative importance values for additional components can be found on the Archived Relative Importance page.

How did the final C-CPI-U compare to the initial estimates?

The final C-CPI-U was higher than its initial estimate in April, May, and June of 2020, though the magnitude of the revision size was relatively small (see table 2). From 2015 to 2019 the average revision size was -0.182 index points.

Table 2. C-CPI-U revision size between initial and final, January 2020 - December 2020
Month Initial Final Revision size

Jan-20

145.200 144.813 -0.388

Feb-20

145.596 145.193 -0.403

Mar-30

145.210 144.913 -0.298

Apr-20

143.976 144.142 0.166

May-20

143.928 144.018 0.090

Jun-20

144.780 144.847 0.067

Jul-20

145.405 145.747 0.342

Aug-20

145.853 146.270 0.418

Sep-20

146.072 146.417 0.345

Oct-20

145.927 146.382 0.455

Nov-20

145.819 146.242 0.423

Dec-20

145.944 146.408 0.465

How did the C-CPI-U compare to the CPI-U?

Chart 1 displays the difference in the 12-month change in the C-CPI-U from the CPI-U, often referred to as upper level substitution bias in the CPI-U.

The average difference between the CPI-U and the C-CPI-U in 2020 was 0.16 percent per annum.