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Consumer Price Index

2022 CPI weight update information

With the release of January 2022 indexes, the BLS updated the spending weights used to calculate the Consumer Price Index (CPI). Previously, weights reflected consumer spending in 2017 and 2018 and were replaced to reflect changes to consumer spending from 2019 and 2020. In August 2021, the BLS announced interventions were considered to mitigate possible measurement errors caused by the COVID-19 pandemic during 2020, but the standard biennial update procedure was ultimately chosen. This information page provides more detail regarding that decision.

The relative importance of a component is its expenditure or value weight expressed as a percentage of spending on all items within an area. Relative importance data are available on the CPI Relative Importance and Weight Information webpage.  More information about how weights have changed over time will be posted to the CPI webpage in the coming months.

The CPI measures the change in the cost of the set of goods and services purchased by consumers from one time period to the next. In the first 50 years of producing the CPI, the BLS updated the spending weights every 10 years based on information from several years earlier collected in periodic surveys. Over time the Consumer Expenditure Surveys (CE) became continuous and the BLS began updating the CPI spending weights every two years, beginning with January 2002 indexes.

The biennial spending weight update reflects consumer spending from two to three years prior. For example, consumer purchases made in 2017 and 2018 were used by BLS as the spending weights in January 2020 through December 2021 CPI-U, CPI-W and R-CPI-E indexes. The overall goal of the CPI-U index is to use consumer spending from as recent a time period as possible, and hold the set (or more precisely, the quantity mix) of goods and services purchased fixed over a period of time until new spending weights can be introduced. In general, estimates of current period inflation tend to be higher when calculated with outdated spending weights when compared to inflation estimates calculated with more current spending weights. This is because consumers change, or substitute, what they buy over time, often shifting purchases away from items that are becoming relatively more expensive to alternatives whose prices are not rising as fast.

While the BLS calculated the CPI using a fixed market basket through 2020 and 2021, consumers changed their spending patterns in response to the COVID-19 pandemic. Thankfully the Census Bureau, the agency administering the CE survey on behalf of BLS, was able to pivot quickly to ensure continuous collection of high quality consumer expenditure data in 2020. There are many reports published on examining the impact of COVID-19 protocols on CE data quality. According to data collected in the CE, consumer spending on apparel in 2020 was down over 20 percent compared with 2019. Consumers shifted their food consumption away from restaurants (spending on food away from home down over 30 percent) towards groceries (spending on food at home up over 10 percent). Spending on public transportation (which includes airfare) was down over 60 percent, but spending by homeowners on their homes, for example on home maintenance and repair, increased over 14 percent.

Throughout the pandemic, BLS was planning for the next biennial weight update for the CPI-U to be effective with the release of the January 2022 index in February 2022, and to remain in effect through publication of the December 2023 indexes. Ordinarily, consumer spending data in 2019 and 2020 would form the basis of this update. Given the large changes to consumer spending in 2020, we had to determine if those data would be relevant for measuring price change in 2022 and 2023.

To address this, it is helpful to remember the goal of a spending weight update is not to predict consumer spending in 2022 and 2023, but rather fix the weights at 2021 levels. Consumer spending from 2021 is the most up-to-date time period as of January 2022. If consumers in 2021 reverted back to their pre-pandemic spending behavior, the BLS could use 2019 consumer spending data as the source of spending weights. Alternatively, if consumer spending in 2021 more closely resembled spending behavior at the beginning of the pandemic, the BLS could use 2020 consumer spending data as the source of spending weights.

CE data for 2021 is still undergoing processing, but other sources of consumer spending data indicate 2021 is an anomalous year in many respects. The BLS looked at the Bureau of Economic Analysis (BEA) estimates of consumer spending (Personal Consumption Expenditure) and estimates of retail sales from the Census Bureau. Private sector data on credit card transactions are also informative.  During the pandemic, BEA began publishing estimates of consumer spending using credit card transaction data it acquired from the private sector. Opportunity Insights is a non-profit organization that also uses credit and debit card data to provide timely estimates of consumer spending. These data sources show spending in 2021 resembled 2020 for many categories. In the first three quarters of 2021, consumers maintained elevated spending on food at home and lower spending on admissions to spectator events. Other spending, for example on apparel and food away from home (such as restaurants), have increased above low levels in 2020.

While none of these measures are directly comparable to the scope and methods of the CE, analyzing their changes in recent years revealed general trends that inform the understanding of consumer spending in 2021 and how it compares to spending in 2019 and 2020. Overall, spending behaviors in 2020 remain relevant in describing spending for many categories. For other categories where spending has return to pre-pandemic levels, 2019 is the most relevant years. From an analysis of these data, the BLS concluded the standard procedure to average spending data over 2019 and 2020 was the best option to proxy 2021 as the basis for the new market basket to calculate January 2022 indexes.

Last Modified Date: February 25, 2022