An official website of the United States government
United States Department of Labor
United States Department of Labor
The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information,
make sure you're on a federal government site.
The site is secure.
The
https:// ensures that you are connecting to the official website and that any
information you provide is encrypted and transmitted securely.
Consumer Price Index
SHARE ON:
2023 CPI Weight Information
With the release of January 2023 indexes, the BLS updated the spending weights used to calculate the Consumer Price Index (CPI). Previously, weights reflected consumer spending in 2019 and 2020 and were replaced to reflect changes to consumer spending in 2021. In May 2022, the BLS announced the change to use a single calendar year of data and update weights annually from the prior practice of using two calendar years of data and update weights biennially. This page provides more information regarding that decision.
Exhibit 1 shows the consumer expenditure revision timeline in the last biennial weight update and first annual weight update. Under a biennial weight update, consumer spending information obtained from the Consumer Expenditure Surveys was collected in 2019 and 2020. The BLS analyzes 2 years of spending information during the following year (2021) to estimate the biennial spending weights used to calculate CPI indexes in 2022. Rather than continuing to use these spending weights in 2023, the BLS updated weights to reflect consumer spending in 2021. With this change, the BLS uses one year of spending data rather than two and updates every year rather than two years. The change reduces the average lag between when consumer makes purchases and when BLS uses those data to calculate the CPI from 36 to 24 months.
| Survey activity | Under the old Biennial Weight Update | Under the new Annual Weight Update |
|---|---|---|
|
Survey period: Consumer Expenditure Survey respondents purchase goods and services, and data collection and processing begin. |
2019–20 | 2021 |
|
Interim period: Data collection continues for the first few months. Data processing continues through the end of the year. |
2021 | 2022 |
|
Publication period: CPI indexes incorporate expenditure data from the survey period period |
2022 - 2023 | 2023 |
Improving the relevance of spending weights
More recent data reflect spending changes made by consumers. Over time, consumers allocate a different share of their spending to the various categories of goods and services they purchase. The spending share of a good or service is spending expressed as a percentage of spending for the entire market basket. For example, in 2019-2020 consumers spent 2.98 percent of their total market basket spending on gasoline (all types). As shown in exhibit 2, the change in biennial weight gasoline spending shares (3.43 to 2.98 percent) is more muted than the annual weight gasoline spending share from 2019 to 2020 (3.37 to 2.57 percent).
| Year | Gasoline |
|---|---|
|
2017 |
3.36 |
|
2018 |
3.50 |
|
2019 |
3.37 |
|
2020 |
2.57 |
|
2017–2018 |
3.43 |
|
2019–2020 |
2.98 |
Improved index accuracy
The BLS conducted research in 2021 to measure the impact of updating spending weights annually from 2002 to 2020 (see Improving Weight Representivity of Fixed Quantity Consumer Price Index Products). Research showed the CPI-U annual inflation rate would have been lower by 0.031 percentage points per year during this period. Using more recent weight data reduces a known bias in the CPI, “upper-level substitution bias,” and improves index accuracy. More information about the upper-level substitution bias is available on the Chained CPI-U webpage. The BLS also verified the feasibility and accuracy of using one year of Consumer Expenditure data to construct the weights.
As a final test, the BLS ensured an annually updated index did not exhibit another kind of measurement error, chain drift. When prices and spending on a given item category sharply increase and decrease over short periods of time, increasing the frequency of weight updates can lead to spurious index movements. Chain drift occurs when spurious index movements result in a long-term measure of price change that is not consistent with the underlying data. To learn more, see “Chain drift” in the Chained Consumer Price Index: 1999–2017. BLS research from the 1990s suggested that chain drift did not result from biennial weight revisions. For the full findings that supported the use of biennial weight revisions, see Expenditure Weight Updates and Measured Inflation. BLS research in 2021 similarly did not find chain drift because of annually updated indexes.
Implementing annual weights in 2023
The BLS had conducted prior research demonstrating the impact of annual weight revisions. In 2009, researchers recommended further exploring this improvement (see Reconsideration of Weighting and Updating Procedures in the US CPI). The COVID-19 pandemic and sudden changes to consumer spending provided motivation to further study this change. After announcing a change to annual weights in May 2022, the BLS published a Federal Register Notice in August 2022 further announcing the methodology change. The BLS will continue evaluating ways to improve the accuracy and relevance of the CPI-U.
For more information about the impact of the 2023 weight update, see the 2023 weight update comparison page.
Last modified date: April 28, 2023