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Consumer Price Index

Since its inception, the CPI has been comprehensively revised on several occasions to implement updated samples and weights, expanded coverage, and enhanced methodolo­gies. The improvements introduced over the years have reflect­ed not only the Bureau’s own experience and research, but also the criticisms and investigations of outside researchers.

The original Consumer Price Index

  • Began publication of separate indexes for 32 cities (1919): Collected prices in central cities periodically
  • Developed weights reflecting the relative importance of goods and services purchased by consumers, from a study that BLS conducted in 1917–1919 of family expenditures in 92 industrial centers
  • Collected prices for major groups: Food, clothing, rent, fuels, house furnishings, and miscellaneous
  • Limited pricing to items selected in advance to represent their categories
  • Began regular publication of a national index, the U.S. city average, in 1921: Based index on an un-weighted average of the city indexes
  • Estimated the U.S. city average back to 1913, using food prices only

The 1940 CPI revision: the first comprehensive revision

  • Used weights based on a 1934–1936 study of consumer expenditures
  • Collected prices in the 34 largest cities
  • Implemented a weighted average of cities for the U.S. city average indexes

Improvements made between the 1940 and 1953 revisions

  • During World War II: Discontinued the pricing of unavailable items, such as new cars and household appliances
  • Increased the weight of other items, including automobile repair and public transportation
  • Adjusted weights in seven cities, using a 1947-1949 survey of consumer expenditures
  • Adjusted weights based on the 1950 Census
  • Adjusted rent index to remove “new unit bias” caused by rent control
  • Added new items to the list of covered items, including frozen foods and televisions

The 1953 CPI revision: the second comprehensive revision

  • Used weights based on a 1950 survey of consumer expenditures conducted in central cities and attached urbanized areas
  • Added a sample of medium and small cities
  • Updated the list of items that the index covered, adding restaurant meals
  • Expanded the sample of rental units and added homeownership costs
  • Improved pricing and calculation methods

The 1964 CPI revision: the third comprehensive revision

  • Based weights on a 1960–1961 survey of consumer expenditures in metropolitan areas
  • Added single-person households to target population: urban wage earner and clerical worker households
  • Extended price collection of goods and services to the suburbs of sampled metropolitan areas
  • Updated the sample of cities, goods and services, and retail stores and service establishments

Improvements made between the 1964 and 1978 revisions

  • Made quality adjustments for new vehicles at model changeover
  • Improved treatment of seasonal items

The 1978 CPI revision: the fourth comprehensive revision

  • Added a new Consumer Price Index: the CPI for All Urban Consumers, or the CPI-U
  • Renamed the older CPI to the CPI for Urban Wage Earners and Clerical Workers, or the CPI-W
  • Based weights on a 1972–1973 survey of consumer expenditures and the 1970 census
  • Expanded the sample to 85 areas (primary sampling units)
  • Increased minimum frequency for obtaining the prices of goods and services (known as “pricing”) from quarterly to bi-monthly
  • Implemented monthly pricing in five largest areas
  • Introduced probability sampling methods at all stages of CPI sampling
  • Introduced checklists that define each category of spending to clarify what is included or excluded from an item
  • Developed estimates of the CPI’s sampling error and optimal sample allocation to minimize that error

Improvements made between the 1978 and 1987 revisions

  • Began systematic replacement of retail outlets and their item samples between major revisions:
    • Implemented a Point-of-Purchase Survey (POPS)
    • Selected retail outlets with probability proportional to consumer spending therein
    • Eliminated reliance on outdated secondary-source sampling frames
    • Began rotating outlet and item samples every 5 years
    • Began rotating one-fifth of the CPI pricing areas each year
    • Introduced rental equivalence concept (January 1983 for the CPI-U; January 1985 for the CPI-W). Additional information on rental equivalence is available in a factsheet.

The 1987 CPI revision: the fifth comprehensive revision

  • Based weights on the 1982–1984 Consumer Expenditure Survey and the 1980 Census
  • Updated samples of items, outlets, and areas
  • Redesigned the CPI housing survey
  • Improved sampling, data collection, data-processing, and statistical estimation methods
  • Initiated more efficient sample design and sample allocation
  • Introduced techniques to make CPI production and calculation more efficient

Improvements made between the 1987 and 1998 revisions

  • Improved housing estimator to account for the aging of the sample housing units
  • Improved the handling of new models of vehicles and other goods
  • Implemented new sample procedures to prevent overweighting items whose prices are likely to rise
  • Improved seasonal adjustment methods
  • Initiated a single hospital services item stratum with a treatment-oriented item definition
  • Discontinued pricing of the inputs to hospital services

The 1998 CPI revision: the sixth comprehensive revision

  • Based weights on the 1993–1995 Consumer Expenditure Survey and the 1990 census
  • Updated geographic and housing samples
  • Extensively revised item classification system
  • Implemented new housing index estimation system
  • Used computer-assisted data collection
  • Added the Telephone Point-of-Purchase Survey (TPOPS) which allows rotation of outlet and item samples by item category and geographic area, rather than by area alone (this survey was previously conducted in person)

Improvements made between the 1998 and 2018 revisions

  • Developed the Consumer Price Index Research Series (January 1999): an estimate of the CPI for all Urban Consumers (CPI-U) from 1978 to present that incorporates most of the improvements made over that time span into the entire series
  • Initiated a new housing survey based on the 1990 census (January 1999): Estimated price change for owners’ equivalent rent directly from rents (an estimate of the implicit rent owner occupants would have to pay if they were renting their homes)
  • Began using a geometric mean formula for most basic indexes (January 1999): Mitigates lower level substitution bias and reflects shifts in consumer spending with item categories as relative price change
  • Expanded the use of hedonic regression in quality adjustment
  • Directed replacement of sample items in the personal computer and other categories, to keep samples current
  • Implemented 4-year outlet rotation to replace 5-year scheme
  • Implemented biennial weight updates starting in January 2002
  • Added the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) in August 2002
    • Uses more advanced “superlative” index formula (the Törnqvist formula)
    • Corrects upper-level substitution bias
  • Expanded collection of price data to all business days of the month (Before 2004, prices were collected the first 18 business days of the month for the first 10 months of the year and the first 15 business days for November and December.)
  • Began publishing indexes to three decimal places (January 2007)
  • Added CPI-E and published it back to 1982 (2008)
    • Congress mandated experimental consumer price index for the elderly (62 years of age and older)
    • CPI-E has limitations related to the expenditure weights, outlets sampled, items priced and the prices collected   

2018 Geographic Revision

  • Introduced a new geographic sample based on the 2010 Census
  • Changed the publication frequency for several local area indexes
  • Established new local area and aggregate indexes
  • Introduced Census Division-level index data

Changes to the CPI establishment frame (2019-2020)

  • Replaced Telephone Point-of-Purchase Survey (TPOPS) as source of retail establishment frame with data from the Consumer Expenditure Surveys (CE)
  • Eliminated redundancies and inefficiencies in survey operations and reduced household burden
  • Use of Quarterly Census of Employment and Wages business registry to refine the location and address data from the CE

For more on the history of the CPI and price change in the U.S see

Last Modified Date: April 9, 2020