Estimation and Comparison of Chained CPI‐U Standard Errors With Regular CPI‐U Results (2000‐2001)

Owen J. Shoemaker

Abstract

In 2001 the BLS calculated and published the first C-CPI-U set of indexes for the 12 months of 2000. This new C-CPI-U (Chained Consumer Price Index - Urban) is calculated and published every year, with a one year lag, using a Tornqvist formula, and can thus be labelled a "superlative" index. A set of weights are updated yearly, so that a unique set of monthly weights are available for both time t as well as for time t-n. We briefly outline the Tornqvist formula and then the methodology for estimating a set of standard errors for these new chained indexes. We then compare, over the 24-month period of Jan 2000 through Dec 2001, these new superlative index results and their standard errors with the regularly published CPI results and their published standard errors.