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Bureau of Labor Statistics > Consumer Price Index > Publications > Factsheets

Price trends for wireless and landline phone services, December 2009-September 2015

Measuring Price Change in the CPI: Telephone hardware, calculators, and other consumer information items

The Consumer Price Index (CPI) category telephone hardware, calculators, and other consumer information items is part of the information technology, hardware, and services group under the education and communication major group. The CPI publishes monthly U.S.-level indexes for information technology, hardware, and services, and all of its components.

Definition for Telephone Hardware, Calculators, and Other Consumer Information Items

The index for telephone hardware, calculators, and other consumer information items reflects price changes for a wide variety of telecommunications items including cellphones, home-based phones, phone accessories, and smartwatches. The sample breakdown for this category is approximately 50 percent cell phones and 50 percent other items within the category. Within cell phones, approximately 95 percent are smartphones, with the remainder composed of feature or basic phones.

Relative Importance

The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.

Table A. Relative importance, December 2023
Item	Relative importance
Information technology, hardware, and services	1.774
Computers, peripherals, and smart home assistant devices	0.309
Computer software and accessories	0.020
Internet services and electronic information providers	0.980
Telephone hardware, calculators, and other consumer information items	0.456

Sample Selection

In order to determine where to collect information on specific categories, including phone hardware, accessories and smart watches, a Consumer Expenditure Survey (CE) is conducted by the U.S. Census Bureau. The CE is used to collect data about where consumers purchase goods and services and how much they are spending. The data from the CE are then used to select the retail establishments in which BLS monitors the prices of items in this category. There are a variety of stores which sell telephone hardware, accessories, calculators and other items; wireless phone company outlets, big box retailers, online retailers, and even kiosks in shopping malls sell at least some of these items.

Cell Phones

The price collected for a cell phone (including smart phones) is the entire cost of the phone, with any promotions or sales deducted from the price. Although consumers may purchase a cell phone at the same time they sign up for wireless service, only changes to the purchase price of the hardware are captured in this category. Wireless services are captured in the wireless telephone services category. If a cell phone is purchased at a wireless carrier, and the cost of the phone can be paid in monthly increments as part of the consumer's monthly service bill, the CPI still collects the price for the phone as if the consumer had bought it outright. Collecting the full transaction price of the phone each month assures uniformity of prices within the sample.

Price Change and Quality Adjustment

For items in this category, the CPI returns every month to each sampled outlet to obtain the current prices of the selected items, including any changes or promotional offerings. Any characteristics of the selected items that have changed are also identified and reviewed. When the price of an item changes, the CPI tries to determine a reason for the change; however, if the characteristics remain unchanged, the price change is usually reflected without any adjustments.

If the originally selected item in the sample is no longer available, a replacement item is selected that is generally the most similar item to the discontinued item. If the replacement is essentially the same as the predecessor item or has minimal changes that provide little value to the consumer, the CPI directly compares the prices between the replacement item and its predecessor. For example, a change between brands of similar quality screen protectors or differences in the speed of wireless charging between two smartphones would be directly compared.

Quality Adjustment: Smartphones

Smartphones are the only item in the telephone hardware, calculators and other consumer information items category which are quality adjusted due to the rapid rate of technological advancements and improved quality to consumers. If a replacement smartphone is different from its predecessor and the quality difference has been estimated through a hedonic regression model, a direct quality adjustment is applied to the previous item’s price for the estimated value of the difference in quality. For example, if a manufacturer provides a higher screen resolution to the latest model in their smartphone line, the CPI adds the value of additional resolution to the price of the predecessor item. Another example would be if a smartphone now featured a faster processor, the value of the additional GHz in speed would be added to the price of the previous smartphone. The hedonic regression model specifies estimated values for smartphone features such as screen resolution, processor speed and cameras. Quality adjustments have been applied for smartphones starting with January 2018 data.

The estimated values for the quality adjustments for smartphones were generated using hedonic regression models. The data used to construct the model were obtained from a secondary source that specializes in capturing smartphone prices from a wide variety of retailers who sell these devices. In addition to providing detailed characteristic information, the secondary source data also provided the full (non-contract) price of each phone which is the price collected in the CPI.

Directed Substitution

Typically an item in the CPI is priced until it is no longer available, but in the case of directed substitution, the CPI will continue to price the current phone or substitute to the latest model, even if the current model is still available. Beginning in April 2018, directed substitution is employed for smartphones to more closely reflect consumer purchases. Directed substitution is based on statistics on how often consumers upgrade their smartphones and will take place approximately twice a year to coincide with new hardware releases from manufacturers. If a smartphone in the sample is two years old or older, random sampling will be used to determine if the current phone should continue to be priced or if a substitution to the latest model should be made.

Special Relative Calculation

There is a special relative calculation (SRC) in this CPI category specifically for smartphones. This SRC index is a subset of the category telephone hardware, calculators, and other consumer information items containing only prices collected for smartphones and began publication in December 2019. This special index is based on a substantially smaller sample.

Data

Access data for telephone hardware, calculators, and other consumer information items and the special relative calculation (SRC) for smartphones in our online database.

Additional information

Additional information may be obtained from the Consumer Price Index Information Office by email or calling 202-691-7000. Information on the CPI's overall methodology can be found in the BLS Handbook of Methods.

Last Modified Date: April 5, 2024