Frequently Asked Questions about the Chained Consumer Price Index for All Urban Consumers (C-CPI-U)

Frequently Asked Questions about the Chained Consumer Price Index for All Urban Consumers (C-CPI-U)

1. What is the C-CPI-U and when did the Bureau of Labor Statistics (BLS) begin publishing it?▸
   • BLS began publishing the Chained Consumer Price Index for All Urban Consumers effective with the release of July 2002 CPI data. Designated the C-CPI-U, the index supplements the existing indexes already produced by the BLS: the CPI for All Urban Consumers (CPI-U) and the CPI for Urban Wage Earners and Clerical Workers (CPI-W).
   • The C-CPI-U employs a formula that reflects the effect of substitution that consumers make across item categories in response to changes in relative prices.
   • C-CPI-U data can be found on the BLS web site at https://data.bls.gov/multi-screen?survey=su.
2. For which items and areas is the C-CPI-U published?▸
   • All C-CPI-U series are published only at the U.S. city average level. C-CPI-U data is available for 29 item categories, including All items, All items less food and energy, the 8 major groups, and a selection of other items. These items and their series ID codes are listed in table 1.

     Table 1: Published C-CPI-U series

     Series ID	Item Title
     SUUR0000SA0	All items
     SUUR0000SA0E	Energy
     SUUR0000SA0L1E	All items less food and energy
     SUUR0000SAA	Apparel
     SUUR0000SAC	Commodities
     SUUR0000SAD	Durables
     SUUR0000SAE	Education and communication
     SUUR0000SAE1	Education
     SUUR0000SAE2	Communication
     SUUR0000SAF	Food and beverages
     SUUR0000SAF1	Food
     SUUR0000SAF11	Food at home
     SUUR0000SAF116	Alcoholic beverages
     SUUR0000SAG	Other goods and services
     SUUR0000SAH	Housing
     SUUR0000SAH1	Shelter
     SUUR0000SAH2	Fuels and utilities
     SUUR0000SAH3	Household furnishings and operations
     SUUR0000SAM	Medical care
     SUUR0000SAM1	Medical care commodities
     SUUR0000SAM2	Medical care services
     SUUR0000SAN	Nondurables
     SUUR0000SAR	Recreation
     SUUR0000SAS	Services
     SUUR0000SAT	Transportation
     SUUR0000SAT1	Private transportation
     SUUR0000SEFV	Food away from home
     SUUR0000SETA01	New vehicles
     SUUR0000SETG	Public transportation

3. What is substitution and substitution bias? And does the C-CPI-U eliminate it?▸
   • Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in consumption patterns that consumers make in response to changes in relative prices.
   • Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; this formula allows for a modest amount of substitution within item categories as relative price changes.
   • The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns.
   • With the geometric mean formula in place to account for consumer substitution within item categories, and the C-CPI-U designed to account for consumer substitution between item categories, any remaining substitution bias would be quite small.
4. When did you decide to use a cost-of-living (COL) index as a framework for the CPI, and why is the CPI still not a COL?▸
   • The C-CPI-U does not represent a fundamental change in the underlying objective of the CPI. BLS has long used the concept of a cost-of-living (COL) index as a framework for dealing with practical questions that arise in the construction of the CPI.
   • While the C-CPI-U accounts for consumer substitution, the CPI still differs from a complete, or "unconditional," cost-of-living measure. While the CPI measures changes over time in the cost of consumer goods and services, an unconditional cost-of-living index would go further, and take into account changes in non-market factors, such as the environment, crime, and education. The CPI is said to be "conditional" on those factors.
5. How is the C-CPI-U constructed and how is it different from the CPI-U and CPI-W?▸
   • Both the CPI-U and C-CPI-U are indexes designed to measure price changes faced by urban consumers, while the CPI-W is designed to measure price changes faced by urban wage earners and clerical workers. Population coverage is the only difference between the CPI-U and CPI-W. The C-CPI-U is further distinguished from the CPI-U and CPI-W based upon the expenditure weights and formula used to produce aggregate measures of price change.
   • As background, all three of the CPI indexes are built in two stages. In the first stage, prices for each of the 7,776item-area combinations (243 item categories X 32 geographic areas) are averaged together to form 7,776 basic indexes. This stage is often referred to as "lower-level aggregation" as it involves averaging the prices within item-area groups. For example, price changes for apples within Chicago are averaged together to produce the Chicago-apples index. A geometric mean formula is used for averaging prices within most of these item-area combinations, in order to approximate the effect of consumer response to changes in relative prices within these item categories. The geometric mean estimator is used in the C-CPI-U in the same item categories in which it is used in the CPI-U and CPI-W.
   • In the second stage, sometimes referred to as "higher-level aggregation", these 7,776 elementary indexes are averaged together to yield various aggregate indexes and ultimately the All-Items, U.S. City Average index of price change. It is at this second stage where the C-CPI-U is different from the CPI-U and CPI-W. The use of a superlative formula 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 and CPI-W use a formula that assumes consumers do not substitute across item categories.
   • Beginning with January 2023 data the CPI-U and CPI-W update weights annually based on a single calendar year of data. These weights remain fixed for 12 months before being replaced with updated expenditures. For example, the CPI-U for 2023 uses expenditure weights from the 2021 Consumer Expenditure Survey.  The final C-CPI-U uses contemporaneous monthly expenditures for each of the 7,776 item-area basic indexes. The monthly expenditures lag the CPI-U 10-12 months due to collection and processing activities. BLS publishes preliminary C-CPI-U indexes, designed to approximate the final C-CPI-U index, to address the time gap. For example, October to December 2023 final indexes are released in February 2025, and the preliminary indexes are released concurrently with the CPI release schedule.
   • In its final form, the C-CPI-U is a monthly chained price index with expenditure weights varying each month. The CPI-U and CPI-W, on the other hand, are annual chained price indexes where their expenditures are updated every year. Within the year span, these indexes are fixed-weight series, where change to the indexes reflects change in prices and not expenditure shares. More detailed information on how the final C-CPI-U is constructed can be found in "Introducing the Chained Consumer Price Index".
6. Where is the C-CPI-U currently being used? ▸
   • Since 2017, the C-CPI-U has been used to adjust Federal tax brackets for inflation. The Census Current Population Survey Annual Social and Economic Supplement (CPS ASEC) uses the C-CPI-U to adjust historical income estimates for inflation. Additionally, a number of states use the C-CPI-U to adjust tax brackets and budgeting.
7. Is it possible for the C-CPI-U to increase faster than the CPI-U? ▸
   • Though it happens infrequently, it is possible for the C-CPI-U to increase faster than the CPI-U, as occurred with the All items C-CPI-U compared to the All items CPI-U in January 2023.
8. Is the difference between the CPI-U and the C-CPI-U fairly stable over time? ▸
   • Earlier evidence suggested that the difference between the CPI-U and the C-CPI-U would be around 0.2 percent a year.  The overall average difference in December-to-December changes from 2001 to 2023 was approximately 0.2 percentage points, though there is some variation in the differences observed in any given year.
9. The C-CPI-U is subject to revision. What is the size of these revisions? ▸
   • The preliminary C-CPI-U is issued first in initial form, and subject to 3 interim revisions, with final data posted 10-12 months after the initial release. Revisions to 12-month changes in the All Items index, for example, generally have been 0.2 percentage points or less.
10. For a given month, will the initial release of the C-CPI-U always be lower than the interim or final release? ▸
    • No. From 2015 to 2022 the initial value was revised upward in about one-third of months.

Last Modified Date: March 6, 2025