Editing Consumer price index (section)

== In the United States ==
{{Main|United States Consumer Price Index}}

[[File:Inflation data.webp|thumb|450px|right|[[producer price index|PPI]] is a [[leading indicator]], CPI and PCE [[Latency (engineering)|lag]]<ref>{{cite web | url=https://www.yahoo.com/now/does-producer-price-index-tell-190327824.html | title=What Does the Producer Price Index Tell You? | date=3 June 2021 }}</ref>
{{legend-line|#00A2FF solid 3px|[[producer price index|PPI]]}}
{{legend-line|#61D836 solid 3px|Core PPI}}
{{legend-line|#929292 solid 3px|CPI}}
{{legend-line|#F8BA00 solid 3px|[[Core inflation|Core]] CPI}}
{{legend-line|#FF2600 solid 3px|[[Personal consumption expenditures price index|PCE]]}}
{{legend-line|#D41876 solid 3px|Core PCE}}]]

In the United States several different consumer price indices are routinely computed by the [[Bureau of Labor Statistics]] (BLS). These include the CPI-U (for all urban consumers), CPI-W (for Urban Wage Earners and Clerical Workers), CPI-E (for the elderly), and C-CPI-U (chained CPI for all urban consumers). These are all built over two stages. First, the BLS collects data to estimate 8,018 separate item–area indices reflecting the prices of 211 categories of consumption items in 38 geographical areas. In the second stage, weighted averages are computed of these 8,018 item–area indices. The different indices differ only in the weights applied to the different 8,018 item–area indices. The weights for CPI-U and CPI-W are held constant for 24 months, changing in January of even-numbered years. The weights for C-CPI-U are updated each month to reflecting changes in consumption patterns in the last month. Thus, if people on average eat more chicken and less beef or more apples and fewer oranges than the previous month, that change would be reflected in next month's C-CPI-U. However, it would not be reflected in CPI-U and CPI-W until January of the next even-numbered year.<ref>{{Cite journal
| url        = http://www.bls.gov/cpi/cpisupqa.htm
| title      = Frequently Asked Questions about the Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
| journal    = Consumer Price Index
| publisher  = [[Bureau of Labor Statistics]]
| access-date = April 11, 2013
| quote      = For example, the CPI-U for the years 2004 and 2005 uses expenditure weights drawn from the 2001–2002 Consumer Expenditure Surveys.
}}</ref>

This allows the BLS to compute consumer price indices for each of the designated 38 geographical areas and for aggregates like the Midwest.<ref>{{Cite journal
| url        = http://www.bls.gov/ro9/cpiport.htm
| title      = Consumer Price Index, Portland – Second Half 2012
| journal       = Consumer Price Index
| publisher  = [[Bureau of Labor Statistics]]
| access-date = April 11, 2013
}}{{Cite journal
| url        = http://www.bls.gov/ro7/cpimdw.htm
| title      = Midwest Region Consumer Price Index – February 2013
| journal       = Consumer Price Index
| publisher  = [[Bureau of Labor Statistics]]
| access-date = April 11, 2013
}}</ref>

In January of each year, [[Social Security (United States)|Social Security]] recipients receive a [[cost of living|cost-of-living]] adjustment (COLA) "to ensure that the purchasing power of Social Security and [[Supplemental Security Income]] (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)".<ref>{{Cite journal
| url        = http://www.ssa.gov/cola/
| title      = Cost-Of-Living Adjustment (COLA) Information For 2013
| journal    = Cost-Of-Living Adjustment
| publisher  = [[Social Security Administration]]
| access-date = April 11, 2013
}}</ref> The use of CPI-W conflicts with this purpose, because the elderly consume substantially more health care goods and services than younger people.<ref name=Reich>{{cite news |title= What's the 'Chained CPI,' Why It's Bad for Social Security and Why the White House Shouldn't Be Touting It (VIDEO)
| first      = Reich |last= Robert |author-link= Robert Reich
| url        = http://www.huffingtonpost.com/robert-reich/chained-cpi_b_3016471.html
| newspaper  = HuffPost |date= April 4, 2013 |access-date= April 11, 2013}}</ref> In recent years, inflation in health care has substantially exceeded inflation in the rest of the economy. Since the weight on health care in CPI-W is much less than the consumption patterns of the elderly, this COLA does not adequately compensate them for the real increases in the costs of the items they buy.

The BLS does track a consumer price index for the elderly (CPI-E). It is not used, in part because the social security trust fund is forecasted to run out of money in roughly 40 years, and using the CPI-E instead of CPI-W would shorten that by roughly five years.<ref>{{cite journal
| last1      = Hobijn |first1= Bart |last2= Lagakos |first2= David |date=May 2003
| title      = Social Security and the Consumer Price Index for the Elderly
| journal    = Current Issues in Economics and Finance
| volume     = 9 |issue= 5 |pages= 1–6 |publisher= Federal Reserve Bank of New York
| access-date = April 11, 2013
| url        = http://www.newyorkfed.org/research/current_issues/ci9-5/ci9-5.html}}</ref>

The most recent December 2021 CPI reading hit 7%, the highest level in over 40 years. In response [[Jerome Powell]], chair of the [[Federal Reserve]] has begun [[Quantitative tightening]] with rate hikes expected to begin in March 2022.<ref>{{Cite news | url=https://edition.cnn.com/2022/01/10/business/fed-powell-confirmation-hearing/index.html | title=Jerome Powell's pitch for a second term: America can't afford runaway inflation | first=Matt | last=Egan | work=[[CNN]] | date=January 15, 2022}}</ref><ref>{{Cite news | url=https://www.wsj.com/articles/powell-confirmation-hearing-could-shed-more-light-on-plans-to-contain-inflation-11641897004 | title=Fed's Powell Says Economy No Longer Needs Aggressive Stimulus | first=Nick| last=Timiraos | work=[[WSJ]] | date=January 15, 2022}}</ref><ref>{{Cite news | url=https://www.theguardian.com/business/2022/jan/12/us-inflation-rate-december-2021 | title=US inflation reached 7% in December as prices rise at rates unseen in decades | first=Lauren | last=Aratani | work=[[The Guardian]] | date=January 15, 2022}}</ref>

===History===

The CPI for various years are listed below with 1982 as the base year:<ref>{{cite web |title=Consumer Price Index Data from 1913 to 2019 |url=https://www.bls.gov/cpi/data.htm |website=Consumer Price Index (CPI) Databases |publisher=United States Department of Labor|access-date=23 April 2019}}</ref><ref>[https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm "Consumer Price Index for All Urban Consumers (CPI-U)", U.S. Bureau of Labor Statistics, last viewed 27 January 2024]</ref>
A CPI of 150 means that there was 50% increase in prices, or 50% inflation, since 1982. 
   
{| class="wikitable"
|-
! Year !! CPI
|-
| 1920 || 20.0 
|-
| 1930 || 16.7 
|-
| 1940 || 14.0 
|-
| 1950 || 24.1 
|-
| 1960 || 29.6 
|-
| 1970 || 38.8 
|-
| 1980 || 82.4 
|-
! 1982 !! 100
|-
| 1990 || 130.7 
|-
| 2000 || 172.2 
|-
| 2010 || 219.2 
|-
| 2020 || 258.0
|-
| 2023 || 299.2
|-
| 2024 || 351.6
|}

=== Chained CPI ===
{{Main|United States Chained Consumer Price Index}}
Former White House Chief of Staff [[Erskine Bowles]] and former U.S. Senator [[Alan K. Simpson]] suggested a transition to using a "chained CPI" in 2010, when they headed the [[National Commission on Fiscal Responsibility and Reform|White House's deficit-reduction commission]].<ref name=losey>{{Cite news |first=Stephen |last=Losey |title=Chained CPI proposal off table for now, lawmakers say |url=http://www.federaltimes.com/article/20121231/BENEFITS02/312310001/Chained-CPI-proposal-off-table-now-lawmakers-say?odyssey=tab%7Ctopnews%7Ctext%7CCongress |work=Federal Times |date=31 December 2012 |access-date=3 January 2013}}</ref> They stated that it was a more accurate measure of inflation than the current system and switching from the current system could save the government more than $290&nbsp;billion over the decade following their report.<ref name=losey/> "The chained CPI is usually 0.25 to 0.30 percentage points lower each year, on average, than the standard CPI measurements".<ref name=losey/>

However, the [[NARFE|National Active and Retired Federal Employees Associations]] said that the chained CPI does not account for seniors citizens' [[health care prices in the United States|health care costs]].<ref name=losey/> [[Robert Reich]], former [[United States Secretary of Labor]] under President [[Bill Clinton|Clinton]], noted that typical seniors spend between 20 and 40 percent of their income on health care, far more than most Americans. "Besides, Social Security isn't in serious trouble. The Social Security trust fund is flush for at least two decades. If we want to ensure it's there beyond that, there's an easy fix – just lift the ceiling on income subject to Social Security taxes, which is now $113,700."<ref name=Reich/>

Replacing the current [[Cost of living adjustment#Cost-of-living adjustment (COLA)|cost-of-living adjustment]] calculation with the chained CPI was considered, but not adopted, as part of a [[American Taxpayer Relief Act of 2012|deficit-reduction proposal]] to avert the [[Budget sequestration|sequestration cuts]], or [[United States fiscal cliff|fiscal cliff]], in January 2013,<ref name=losey/> but President [[Barack Obama|Obama]] included it in his April 2013 budget proposal.<ref>{{Cite news |first=Ginger |last= Gibson
| title     = Republicans applaud chained CPI in Obama budget
| url       = http://www.politico.com/story/2013/04/republicans-applaud-chained-cpi-in-obama-budget-89831.html
| newspaper = Politico |date= April 9, 2013 |access-date= April 11, 2013}}</ref>

===Personal consumption expenditures price index===
{{Main|Personal consumption expenditures price index}}
[[File:CPI vs PCE.webp|thumb|300px|
{{legend-line|#4572A7 solid 3px|CPI}}
{{legend-line|#AA4643 solid 3px|[[Core inflation|Core CPI]]}}
{{legend-line|#89A54E solid 3px|[[Personal consumption expenditures price index|PCE]]}}
{{legend-line|#80699B solid 3px|[[Core inflation|Core PCE]]}}]]
[[File:CPI vs PCE.jpg|thumb|300px|right|CPI vs [[Personal consumption expenditures price index|PCE]]]]
Because of some shortcomings of the CPI, notably that it uses static expenditure weighting and it does not account for the [[substitution effect]], the [[Personal consumption expenditures price index|PCEPI]] is an alternative price index used by the Federal Reserve, among others, to measure inflation.<ref>{{cite web|url=https://www.federalreserve.gov/faqs/economy_14419.htm|title=The Fed - What is inflation and how does the Federal Reserve evaluate changes in the rate of inflation?|access-date=9 September 2018}}</ref> From January 1959 through July 2018, inflation measured by the PCEPI has averaged 3.3%, while it has averaged 3.8% using CPI.<ref>PCE and CPI indices, Jan 1959 - Jul 2018: {{cite web|url=https://fred.stlouisfed.org/graph/?g=l8oi|title=FRED Graph - FRED - St. Louis Fed|website=fred.stlouisfed.org|access-date=9 September 2018}}</ref>