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Consumer Price Index
Bureau of Labor Statistics > Consumer Price Index > About > Questions & Answers

Frequently Asked Questions (FAQs)

Overview

  1. What is the CPI?▸
    • The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by consumers for a representative basket of consumer goods and services. The CPI measures inflation as experienced by consumers in their day-to-day living expenses.
    • The CPI represents all goods and services purchased for consumption by the reference population. BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls.
    • In addition, the CPI includes taxes (such as sales and excise taxes) that are directly associated with the prices of specific goods and services. However, the CPI excludes taxes (such as income and Social Security taxes) not directly associated with the purchase of consumer goods and services. The CPI also does not include investment items, such as stocks, bonds, real estate, and life insurance because these items relate to savings, and not day-to-day consumption expenses.
  2. Whose buying habits does the CPI reflect? ▸
    • The CPI measures the average price change over time for a market basket of goods and services for two target populations: All Urban Consumers (CPI-U population) and Urban Wage Earners and Clerical Workers (CPI-W population).
    • Both the CPI-U and the Chained CPI (C-CPI-U) use the CPI-U population. The CPI-U population constitutes over 90 percent of the U.S. population and covers households in all areas of the United States, specifically, all urban households in core-based statistical areas (CBSAs) and in urban places of 10,000 inhabitants or more. Not covered are people living in rural nonmetropolitan areas, in farm households, on military installations, in religious communities, and in institutions such as prisons and mental hospitals.
    • The CPI-W population is a subset of the CPI-U population and represents approximately 30 percent of the total U.S. population. The CPI-W consists of all CPI-U population households in which at least one of the members has been employed for 37 weeks or more during the previous 12 months in an eligible occupation and for which 50 percent or more of the household income must come from wage earnings associated with an eligible occupation. Eligible occupations include clerical workers, sales workers, protective and other service workers, laborers, and construction workers. The CPI-W population excludes households of professional and salaried workers, part-time workers, the self-employed, and the unemployed, along with households with no one in the labor force, such as those of retirees.
    • The CPI does not necessarily measure your own experience with price change. It is important to understand that BLS bases the market baskets and pricing procedures for the CPI-U and CPI-W populations on the experience of the relevant average household, not of any specific family or individual. For example, if you spend a larger-than-average share of your budget on medical expenses, and medical care costs are increasing more rapidly than the cost of other items in the CPI market basket, your personal rate of inflation may exceed the increase in the CPI. Conversely, if you heat your home with solar energy, and fuel prices are rising more rapidly than other items, you may experience less inflation than the general population does. A national average reflects millions of individual price experiences; it seldom mirrors a particular consumer's experience.
    • Additional information on this topic is available in the Why the Published Averages Don’t Always Match an Individual’s Inflation Experience factsheet.
  3. Is the CPI a cost-of-living index? ▸
    • The CPI frequently is called a cost-of-living index, but it differs in important ways from a complete cost-of-living measure. We use a cost-of-living framework in making practical decisions about questions that arise in constructing the CPI. A cost-of-living index is a conceptual measurement goal, however, and not a straightforward alternative to the CPI. A cost-of-living index would measure changes over time in the amount that consumers need to spend to reach a certain utility level or standard of living. Both the CPI and a cost-of-living index would reflect changes in the prices of goods and services, such as food and clothing that are directly purchased in the marketplace; but a complete cost-of-living index would go beyond this role to also take into account changes in other governmental or environmental factors that affect consumers' well-being. It is very difficult to determine the proper treatment of public goods, such as safety and education, and other broad concerns, such as health, water quality, and crime, that would constitute a complete cost-of-living framework. Since the CPI does not attempt to quantify all the factors that affect the cost-of-living, it is sometimes termed a conditional cost-of-living index.
    • Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in buying or consumption patterns that consumers would make to adjust to relative price changes. The ability to substitute means that the increase in the cost to consumers of maintaining their level of well-being tends to be somewhat less than the increase in the cost of the mix of goods and services they previously purchased.
    • Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; in other words, the prices within most item categories (for example, apples) are averaged with the use of a geometric mean formula. This improvement moves the CPI closer to a cost-of-living measure, because the geometric mean formula allows for a modest amount of consumer substitution as relative prices within item categories change.
    • The C-CPI-U also allows for substitution across item categories and is thought by some to be a closer approximation to a cost-of-living index. However, the expenditure data used to compute the final C-CPI-U isn't available until 10-12 months after the reference month, so a preliminary estimate of the index is published and later revised.
    • Additional information about the Chained CPI is available on the Chained Consumer Price Index webpage.
  4. Which index is the "official CPI" reported in the media?▸
    • The broadest and most comprehensive CPI is called the All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, 1982-84=100. CPI data are reported on a not seasonally adjusted basis as well as a seasonally adjusted basis. Sometimes the index level itself will be reported, but it is also common to see 1-month, or 12-month percent changes reported.
    • In addition to the all items index, BLS publishes thousands of other consumer price indexes, such as all items less food and energy. Some users of CPI data use this index because food and energy prices are relatively volatile, and they want to focus on what they perceive to be the "core" or "underlying" rate of inflation.
  5. How can I stay up to date with the CPI?▸
    • Future CPI release dates are available on the BLS release calendar. Information is available from the CPI website, through email subscriptions to data products, and from BLS publications such as the Monthly Labor Review (MLR) and Beyond the Numbers. You can search for articles related to the CPI in these publications or from the search bar.
    • BLS is also on social media. Follow the BLS on Twitter to see the latest statistics that can help you make informed decisions, whether you're a worker, jobseeker, student, employer, investor, or policymaker.
  6. How can I get more information on the CPI?▸

Design

  1. How is the CPI market basket determined?▸
    • The CPI consists of a family of indexes that measure price change experienced by urban consumers. Specifically, the CPI measures the average change in price over time of a market basket of consumer goods and services. The market basket includes everything from food items to automobiles to rent. The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought. There is a time lag between the expenditure survey and its use in the CPI. For example, CPI data in 2023 was based on data collected from the Consumer Expenditure Surveys (CE) for 2021. That year, over 20,000 consumer units from around the country provided information each quarter on their spending habits in the interview survey. To collect information on frequently purchased items, such as food and personal care products, approximately another 12,000 consumer units kept diaries listing all items they bought during a 2-week period that year. This expenditure information from weekly diaries and quarterly interviews determines the relative importance, or weight, of the item categories in the CPI index structure.
    • The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls.
    • In addition, the CPI includes taxes (such as sales and excise taxes) that are directly associated with the prices of specific goods and services. However, the CPI excludes taxes (such as income and Social Security taxes) not directly associated with the purchase of consumer goods and services. The CPI also does not include investment items, such as stocks, bonds, real estate, and life insurance because these items relate to savings, and not to day-to-day consumption expenses.
  2. How is the CPI sample created?▸
    • The CPI sample-design process involves multiple stages. In the first stage, a sample of geographic areas is selected. In subsequent stages, BLS selects a sample of outlets in which area residents make retail purchases, a sample of specific retail goods and services that area residents buy, and a sample of residential housing units. The samples are rotated on a regular basis; the geographic sample has traditionally been rotated once after each decennial census.
    • Area sample: Effective with the 2018 redesign based on the 2010 census, the current geographic sample (appendix 1) was introduced over a multiyear span beginning in 2018. The area definitions are based on the 2013 Office of Management and Budget’s (OMB) CBSAs.⁠
    • Outlet sample: The outlet sample for most items in the CPI is developed with data from the CE Survey. The survey furnishes data on retail outlets from which metropolitan and micropolitan households purchased well-defined groups of commodities and services to be priced in the CPI.
    • Commodities and services are grouped into sampling categories based on entry-level items as defined in the CPI classification structure. Some categories consist of only one ELI, while others consist of more. Entry-level items are combined into a single category when the commodities or services generally are sold in the same outlets; for example, boys' outerwear and boys' shirts and sweaters are both in the same category.
    • Alternative collection methods: Although most of the prices used to compute the CPI are collected by BLS through the process described above, in some cases these data are provided from other sources. For example, beginning with the release of June 2021 indexes, BLS utilizes a secondary source dataset rather than traditional in-person or website collection for gasoline. More information is available in the gasoline ACM page.
    • Also, with the release of April 2022 indexes, the data collected by the BLS for the new vehicles index was replaced with transaction data from J.D. Power. More information is available in the new vehicles factsheet.
    • For each of the item categories, using scientific statistical procedures, the Bureau has chosen samples of several hundred specific items within selected business establishments frequented by consumers to represent the thousands of varieties available in the marketplace. For example, in a given supermarket, the Bureau may choose a plastic bag of golden delicious apples, U.S. extra fancy grade, weighing 4.4 pounds, to represent the apples category.
    • Additional information about published items and item classification structure is available in the CPI section of the BLS Handbook of Methods.
  3. How is the CPI calculated?▸
    • The CPI is a product of a series of interrelated samples. First, using data from the U.S. Census Bureau we select the urban areas from which data on prices are collected. Next, a sample of data from the CE Survey identifies the places where households purchase various types of goods and services, forming the basis for the CPI outlet sample. Also using data from the CE Survey, BLS statisticians assign quotes in the CPI item categories to specific outlets. A specific item is then chosen for selection using a process which bases the probability of selection for an item on the share the item composes within the outlet’s revenue in that item category.
    • Recorded price changes are weighted by the importance of the item in the spending patterns of the appropriate population group. The combination of carefully selected geographic areas, retail establishments, commodities and services, and associated weight, gives a weighted measurement of price change for all items in all outlets, in all areas priced for the CPI.
    • Additional information on how the CPI is calculated is available in the CPI section of the BLS Handbook of Methods.
  4. Will the CPI be revised or corrected in the future?▸
    • The CPI, unlike many other statistical series, does not rely on respondents to send data to the BLS national office; CPI data collectors collect almost all of the data for the CPI-U and CPI-W. Virtually all data are received in time for the calculation of indexes for the appropriate month, so routine revisions to account for late-arriving data are not necessary. The CPI-U and CPI-W are commonly used in escalation agreements and to adjust pensions and tax brackets; consequently, revisions can be costly for the users of these indexes, so these series are final when issued. Additional information on escalation contracts is available in the How to Use the Consumer Price Index for Escalation factsheet.
    • In the rare case when BLS discovers that an error was made while collecting or compiling information, we issue a correction to the affected series in accordance with BLS policies.
    • As previously noted, C-CPI-U indexes are not final when first issued; they are subject to three quarterly revisions. The data are final after the last revision, which occurs 10–12 months after the initial publication. If the CPI-U and CPI-W series are corrected, the C-CPI-U series is corrected as well for all series affected by the error, as far back as the previous 5 years.
    • Additional information on the process of estimating, examining the major procedures and process, new data collection methods, and recent improvements to CPI component indexes is available in the article on Assessing and improving the accuracy of the CPI.

Available data

  1. What types of data are published? ▸
    • Many types of data are published as outputs from the CPI program; the most popular are indexes and percent changes. Requested less often are relative importance (or relative expenditure weight) data, base conversion factors (to convert from one CPI reference period to another), seasonal factors (the monthly factors used to convert unadjusted indexes into seasonally adjusted indexes), and average food and energy prices.
    • Index and price change data are available for the U.S. city average (or national average), for various geographic areas (regions and metropolitan areas), for national population-size classes of urban areas, and for cross-classifications of regions and size classes. Indexes for various groupings of items are available for all geographic areas and size classes. Index levels are published along with short-term percent changes and 12-month percent changes. At the national item and group level, unadjusted and (where appropriate) seasonally adjusted percent changes are also published.
    • Average prices for select utility, automotive fuel, and food items are published at the U.S. level each month. If the sample size is sufficient, all average prices are also published monthly at the regional level. Average prices for utility gas, electricity, and automotive fuel prices are also published at the size class and area level.
  2. What area indexes are published and how often? ▸
    • National (or U.S. City Average) indexes are published monthly for the CPI-U, CPI-W, and C-CPI-U. For the CPI-U, an extensive set of component indexes and sub-aggregates are published monthly along with the all items index. A similar, but slightly smaller set is published for the CPI-W. For the C-CPI-U, only national indexes are published, with a more limited set of components and aggregates published. However, the expenditure data used to compute the final C-CPI-U aren’t available until 10-12 months after the reference month, so a preliminary estimate of the index is published and later revised.
      CPI-U and CPI-W data are also published for the following areas:
      Area Publication cycle

      Northeast Region

      		 Monthly

      New England Division

      		 Monthly

      Boston-Cambridge-Newton, MA-NH

      		 Bimonthly (Odd)

      Middle Atlantic Division

      		 Monthly

      New York-Newark-Jersey City, NY-NJ-PA

      		 Monthly

      Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

      		 Bimonthly (Even)

      Midwest Region

      		 Monthly

      East North Central Division

      		 Monthly

      Chicago-Naperville-Elgin, IL-IN-WI

      		 Monthly

      Detroit-Warren-Dearborn, MI

      		 Bimonthly (Even)

      West North Central Division

      		 Monthly

      Minneapolis-St. Paul-Bloomington, MN-WI

      		 Bimonthly (Odd)

      St. Louis, MO-IL

      		 Bimonthly (Even)

      South Region

      		 Monthly

      South Atlantic Division

      		 Monthly

      Atlanta-Sandy Springs-Roswell, GA

      		 Bimonthly (Even)

      Baltimore-Columbia-Towson, MD

      		 Bimonthly (Even)

      Miami-Fort Lauderdale-West Palm Beach, FL

      		 Bimonthly (Even)

      Tampa-St. Petersburg-Clearwater, FL

      		 Bimonthly (Odd)

      Washington-Arlington-Alexandria, DC-VA-MD-WV

      		 Bimonthly (Odd)

      East South Central Division

      		 Monthly

      West South Central Division

      		 Monthly

      Dallas-Fort Worth-Arlington, TX

      		 Bimonthly (Odd)

      Houston-The Woodlands-Sugar Land, TX

      		 Bimonthly (Even)

      West Region

      		 Monthly

      Mountain Division

      		 Monthly

      Denver-Aurora-Lakewood, CO

      		 Bimonthly (Odd)

      Phoenix-Mesa-Scottsdale, AZ

      		 Bimonthly (Even)

      Pacific Division

      		 Monthly

      Los Angeles-Long Beach-Anaheim, CA

      		 Monthly

      Riverside-San Bernardino-Ontario, CA

      		 Bimonthly (Odd)

      San Diego-Carlsbad, CA

      		 Bimonthly (Odd)

      San Francisco-Oakland-Hayward, CA

      		 Bimonthly (Even)

      Seattle-Tacoma-Bellevue, WA

      		 Bimonthly (Even)

      Urban Alaska

      		 Bimonthly (Even)

      Urban Hawaii

      		 Bimonthly (Odd)
      The set of components and sub-aggregates published for regional and metropolitan indexes is more limited that at the U.S. city average level; these indexes are byproducts of the national CPI program. Each local index has a much smaller sample size than the national or regional indexes and is, therefore, subject to substantially more sampling and other measurement error. As a result, local-area indexes are more volatile than the national or regional indexes, and we urge users to consider adopting the national or regional CPIs for use in escalator clauses. Used with caution, local-area CPI data can illustrate and explain the impact of local economic conditions on consumers' experience with price change. If there is no CPI for the area you are in, we can provide some guidance on a recommended area to use instead, but users must make the final decision.
  3. Can indexes for individual areas be used to compare living costs among the areas? ▸
    • No, an individual area index measures how much prices have changed over a specific period in that particular area; it does not show whether prices or living costs are higher or lower in that area relative to another. In general, the composition of the market basket and the relative prices of goods and services in the market basket during the expenditure base period vary substantially across areas.

Using the CPI

  1. How is the CPI used? ▸
    • The CPI affects nearly all Americans because of the many ways it is used. Some examples of how it is used follow:
    • As an economic indicator. The CPI is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy. It provides information about price changes in the Nation's economy to government, business, labor, and private citizens and is used by them as a guide to making economic decisions. In addition, the President, Congress, and the Federal Reserve Board use trends in the CPI to aid in formulating fiscal and monetary policies.
    • As a deflator of other economic series. The CPI and its components are used to adjust other economic series for price changes and to translate these series into inflation-free dollars. Examples of series adjusted by the CPI include retail sales, hourly and weekly earnings, and components of the National Income and Product Accounts.
    • The CPI is also used as a deflator of the value of the consumer's dollar to find its purchasing power. The purchasing power of the consumer's dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. In other words, as prices increase, the purchasing power of the consumer's dollar declines.
    • As a means of adjusting dollar values. The CPI is often used to adjust consumers' income payments (for example, Social Security), to adjust income eligibility levels for government assistance, and to automatically provide cost-of-living wage adjustments to millions of American workers. The index affects the income of more than 108 million people because of statutory action: over 67 million Social Security beneficiaries and over 41 million Supplemental Nutrition Assistance Program (SNAP) recipients (formerly food stamps), among other programs.
    • Another example of how dollar values may be adjusted is the use of the CPI to adjust the Federal income tax structure. These adjustments prevent inflation-induced increases in tax rates. In addition, eligibility criteria for millions of food stamp recipients, and children who eat lunch at school, are affected by changes in the CPI. Many collective bargaining agreements also tie wage increases to the CPI.
  2. How do I read or interpret an index?▸
    • An index is a tool that simplifies the measurement of movements in a numerical series. Most CPI index series have a 1982-84=100 reference base. That is, BLS sets the average index level (representing the average price level) for the 36-month period covering the years 1982, 1983, and 1984 equal to 100; then measures changes in relation to that figure. An index of 110, for example, means there has been a 10-percent increase in price since the reference period; similarly, an index of 90 means there has been a 10-percent decrease. Movements of the index from one date to another can be expressed as changes in index points (simply, the difference between index levels), but it is more useful to express the movements as percent changes. This is because index points are affected by the level of the index in relation to its reference period, while percent changes are not.
    • In the table that follows, Item A increased by half as many index points as Item B between Year I and Year II. Yet, because of different starting indexes, both items had the same percent change; that is, prices advanced at the same rate. By contrast, Items B and C show the same change in index points, but the percent change is greater for Item C because of its lower starting index value.
      Index change calculation

       

      		 Item A Item B Item C

      Year I

      		 112.500 225.000 110.000

      Year II

      		 121.500 243.000 128.000

      Change in index points

      		 9.0 18.0 18.0

      Percent change

      		 9.0/112.500 x 100 = 8.0 18.0/225.000 x 100 = 8.0 18.0/110.000 x 100 = 16.4
  3. Is the CPI the best measure of inflation? ▸
    • Various indexes have been devised to measure different aspects of inflation. Inflation has been defined as a process of continuously rising prices or, equivalently, of a continuously falling value of money. The CPI measures inflation as experienced by consumers in their day-to-day living expenses; the Producer Price Index (PPI) measures inflation at earlier stages of the production process; the International Price Program (IPP) measures inflation for imports and exports; the Employment Cost Index (ECI) measures inflation in the labor market; and the Gross Domestic Product (GDP) Deflator measures inflation experienced by both consumers themselves as well as governments and other institutions providing goods and services to consumers. There are also specialized measures, such as measures of interest rates.
    • The "best" measure of inflation depends on the intended use of the data. The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase at today's prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period.
  4. What index should I use for escalation? ▸
    • The decision to employ an escalation mechanism, as well as the choice of the most suitable index, is up to the user. When the terms of an escalation contract are drafted, both legal and statistical questions can arise. While we cannot help in matters relating to legal questions, we can provide basic technical and statistical assistance to users who are developing indexing procedures. In general, for escalation, we strongly recommend using indexes that are not seasonally adjusted. We also recommend using national or regional indexes, due to the volatility of local indexes.
    • Another consideration is whether to use a particular monthly index from one year to the next, such as December to December, or use annual averages. From a statistical perspective, each of these types of indexes has its advantages. A 12-month percent change from, say, December-to-December, is arguably a more recent estimate of price change than an annual average percent change. Said another way, the December-to-December percent change is the most recent 12-month percent change in a year, while the annual average percent change reflects the change in the average index for all 12 months of one year to the average index for all 12 months the next year. The December-to-December index percent change, however, tends to be more volatile than the percent change in the annual average index. Annual average indexes are based on 12 monthly data points which, when averaged, reduce volatility by smoothing out the highs and lows.
    • When drafting a contract that uses an index series for escalation, it is helpful to be as specific as possible so that all parties will be clear about the terms. A reference to ‘CPI’ or even ‘CPI-U’ can be ambiguous. To be completely clear, a contract should specify all of the parameters needed to identify a unique series, such as ‘Consumer Price Index for All Urban Consumers (CPI-U), US City Average, All Items, 1982-84=100, not seasonally adjusted.’
    • Additional information on using CPI data for escalation is available in the How to Use the Consumer Price Index for Escalation factsheet.
  5. When should I use seasonally adjusted data?▸
    • By using seasonally adjusted data, some users find it easier to see the underlying trend in short-term price changes. It is often difficult to tell from raw (unadjusted) statistics whether developments between any 2 months reflect changing economic conditions or only normal seasonal patterns. Therefore, many economic time series, including the CPI, are adjusted to remove the effect of seasonal influences—those which occur at the same time and in about the same magnitude every year. Among these influences are price movements resulting from changing weather conditions, production cycles, changeovers of models, and holidays.
    • BLS annually re-estimates the factors that are used to seasonally adjust CPI data. Seasonally adjusted indexes that have been published earlier are subject to revision for up to 5 years after their original release. Therefore, unadjusted data are more appropriate for escalation purposes.
  6. Why do the sum of the effects of services less energy services and commodities less food and energy commodities not always equal the effect of all items less food and energy?▸
    • There are intermediate aggregate items used in the construction of the seasonally adjusted all items less food and energy index which have to be split out according to which are commodities and which are services, with some subcomponents in services less energy services and others in commodities less food and energy commodities. In cases where intermediate aggregate components used in the construction of the all items less food and energy index are seasonally adjusted, but not all the constituent subcomponent indexes are individually seasonally adjusted, a situation can arise where the seasonal pattern exhibited by the aggregate is different from the seasonal pattern exhibited by the components. Often, this difference is not large enough to be visible at the published level of decimal precision. However, when the overall impact of seasonal adjustment is large, typically in November and December, these differences can grow to a level where they can be observed in the published data.
  7. How is the CPI used by the Social Security Administration (SSA) to calculate Cost of Living Adjustments (COLAs) for Social Security recipients?▸
    • Congress amended the Social Security Act of 1935 with public law 92-336 in 1973. Part of that amendment called for automatic annual cost of living increases to be made to Social Security payments based on the CPI.
    • The COLA is defined as the percent increase between the third quarter average of the CPI-W for a given year and the previous peak third-quarter average of the CPI-W. BLS calculates the CPI-W and other CPI series, but we do not determine policy regarding how these series are used by other agencies, nor are we involved in making or adjusting Social Security payments. Additional information about the COLA is available on the SSA website.
  8. What are some limitations of the CPI?▸
    • The CPI is subject to both limitations in application and limitations in measurement.
    • Limitations in application One limitation is that the CPI may not be applicable to all population groups. For example, the CPI-U is designed to measure inflation for the U.S. urban population and thus may not accurately reflect the experience of people living in rural areas. The CPI does not produce official estimates for the rate of inflation experienced by subgroups of the population, such as for Americans 62 years of age and older or for equivalized income quintiles. Note that we do produce a research index for the for Americans 62 years of age and older (R-CPI-E)and a research index by equivalized income quintiles (R-CPI-I) and a research chained index by equivalized income quintiles (R-C-CPI-I). Because of the significant limitations of this research indexes, they should be interpreted with caution.
    • Another limitation is that the CPI cannot be used to measure differences in price levels or living costs between one area and another as it measures only time-to-time changes in each area. A higher index for one area does not necessarily mean that prices are higher there than in another area with a lower index. Instead, it means that prices have risen faster in the area with the higher index calculated from the two areas' common reference period. Additionally, the CPI is a conditional cost-of-living measure; it does not attempt to measure everything that affects living standards. Factors such as social and environmental changes and changes in income taxes are beyond the definitional scope of the index and are excluded.
    • Limitations in measurement Limitations in measurement can be grouped into two basic types, sampling error and non-sampling error.
    • Sampling error. Because the CPI measures price changes based on a sample of items, the published indexes differ somewhat from what the results would be if actual records of all retail purchases by everyone in the index population could be used to compile the index. These estimating or sampling errors are limitations on the accuracy of the index, not mistakes in calculating the index. The CPI program has developed measurements of sampling error, called variance estimates, which are updated and published annually at CPI Variance Estimates. The CPI sample design allocates the sample in a way that maximizes the accuracy of the index, given the funds available.
    • Non-sampling error. These errors occur from a variety of sources and unlike sampling errors, they can cause persistent bias in measurements of the index. Non-sampling errors are caused by problems of price data collection, logistical lags in conducting surveys, difficulties in defining basic concepts and their operational implementation, and difficulties in handling the problems of quality change. We expend considerable effort to minimize these errors. Highly trained personnel ensure the comparability of quality of items from period to period; collection procedures are extensively documented, and recurring audits are conducted. The CPI program has an ongoing research and evaluation program in order to identify and implement improvements in the index.

Data collection

  1. How and when are the majority of CPI prices collected and reviewed?▸
    • BLS data collectors visit (in person, on the web, or using apps) or call thousands of retail stores, service establishments, rental units, and doctors' offices, all over the United States to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. We record the prices of about 80,000 items each month, representing a scientifically selected sample of the prices paid by consumers for goods and services purchased.
    • During each call or visit, the data collector collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a 64-ounce container has been replaced by a 59-ounce container) of the good or service since the last time prices were collected, a new item is selected or the quality change in the current item is recorded.
    • Prices used to compute the CPI are collected during the entire month. CPI data is published monthly, with the index value representing an estimate of the price level for the month as a whole, rather than a specific date. Since certain prices, particularly gasoline, might move sharply within a month, it is useful to understand the timing of price collection. A month is divided into three pricing periods, each period corresponding to roughly the first ten days, second ten days, or third ten days of the month.
    • When an item is initiated into the CPI sample, its pricing period is established, and it will be repriced during that same period until it exits the sample after four years. Data collectors have discretion within pricing periods, so they can collect quotes at any time during the period. So, it's not necessarily true that data collection is spread perfectly evenly through the month; however, roughly equal amounts of data are collected in each pricing period. Rent prices are an exception to this, as prices in the rent sample are not divided by pricing periods, and specific rent quotes can be collected at any time during the month.
    • Pricing information is then sent to our national office, where specialists who have detailed knowledge about the particular goods or services review the data. These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments. Adjustments can range from an adjustment for a change in the size or quantity of a packaged item, to more complex adjustments based upon statistical analysis of the value of an item's features or quality. Thus, commodity specialists strive to prevent changes in the quality of items from affecting the CPI's measurement of price change.
  2. Does the CPI collect prices from online outlets?▸
    • The outlets in the CPI sample are selected using data from the CE Survey where respondents are asked where they made purchases. To the extent respondents of that survey report making purchases from online outlets, those outlets have a chance of being selected for the sample. As of 2023, approximately16 percent of quotes in the CPI sample (excluding the rent sample) are from online outlets. As expected, the percentage of quotes from online sources varies greatly depending on the item category.
  3. How are taxes treated in the CPI?▸
    • Taxes that are directly associated with the purchase of specific goods and services (such as sales and excise taxes), as well as government user fees, are included in the CPI. For example, toll charges and parking fees are included in the transportation category, and entry fees to national parks are included as part of the admissions index. In addition, property taxes are indirectly reflected in the BLS method of measuring the cost of the flow of services provided by shelter, called owners' equivalent rent, to the extent that these taxes influence rental values. Taxes not directly associated with specific purchases, such as income and Social Security taxes, are excluded, as are the government services paid for through those taxes.
  4. Are CPI prices shared with other BLS price programs?▸
    • In certain situations, yes. In an effort to increase efficiency and reduce overall respondent burden, the Consumer Price Index Program, the Producer Price Index Program, and the International Price Program may share resources to collect pricing information from respondents that are selected for inclusion in multiple surveys. In these cases, prices for the same product or service may be used by more than one price program; however, each program would determine appropriate weighting according to its own established methodology. All information shared across programs is used for statistical purposes only and is protected under the BLS confidentiality pledge.

Last Modified Date: December 11, 2024