Evaluating the Consumer Price Index Using Nielsen’s Scanner Data

Jenny Fitzgerald and Owen J. Shoemaker

Abstract

The Consumer Price Index (CPI) estimates the change in prices over time of the goods and services U.S. consumers buy for day-to-day living based on price quotes selected from probability samples. The goal of our research is to determine how accurately the current CPI sample and indexes reflect reality. For our research, we calculate superlative price indexes from Nielsen’s scanner data, which we assume to represent the real universe of commodities data. We then compare the Consumer Price Indexes for self-representing areas at the expenditure class level to our superlative price indexes derived from Nielsen’s scanner data.