The combination of carefully selected geographic areas, retail establishments, commodities and services, and associated weight, gives a weighted measurement of price change for all items in all outlets, in all areas priced for the CPI.Īdditional information on how the CPI is calculated is available in the CPI section of the BLS Handbook of Methods. Recorded price changes are weighted by the importance of the item in the spending patterns of the appropriate population group. A specific item is then chosen for selection using a process which bases the probability of selection for an item on the share the item composes within the outlet’s revenue in that item category. Also using data from the Consumer Expenditure Survey, BLS statisticians assign quotes in the CPI item categories to specific outlets. Next, a sample of data from the Conumer Expenditure Survey identifies the places where households purchase various types of goods and services, forming the basis for the CPI outlet sample. Census we select the urban areas from which data on prices are collected. The CPI is a product of a series of interrelated samples. So the cheese sample (or the new vehicle sample, the television sample, etc.) contains a wide variety of styles and brands of cheese, vehicles, televisions, etc. The process of selecting individual quotes results in the sample as a whole containing a wide variety of specific items of a category roughly corresponding to consumer purchases. Repricing is usually done in person, but may be done via telephone or the internet. This item will be repriced, monthly or bimonthly, until it is replaced after four years through sample rotation. The particular kind of cheese that is selected will continue to be priced each month in the same outlet. After probabilities are assigned, one type, brand, and container size of cheese is chosen by an objective selection process based on the theory of random sampling. package will be 7 times as likely to be chosen as the 6 oz. packages accounts for 20 percent of all cheese sales, then the 8 oz. packages accounts for 10 percent of all cheese sales, and the same cheese in 12 oz. packages makes up 70 percent of the sales of cheese, and the same cheese in 6 oz. A particular type of cheese item will be chosen, with its likelihood of being selected roughly proportional to its popularity. For example, suppose a particular grocery store has an outlet where cheese will be priced. This initiation process, typically carried out in person by a CPI data collector, involves selecting a specific item to be priced from the category that has been designated to be priced at that store. Over the 2 year period, then, expenditure information came from approximately 24,000 weekly diaries and 48,000 quarterly interviews used to determine the importance, or weight, of the item categories in the CPI index structure.Ī particular item enters the CPI sample through a process called initiation. To collect information on frequently purchased items, such as food and personal care products, another 12,000 consumers in each of these years kept diaries listing everything they bought during a 2-week period. In each of those years, about 24,000 consumers from around the country provided information each quarter on their spending habits in the interview survey. For example, CPI data in 20 was based on data collected from the Consumer Expenditure Surveys for 20. There is a time lag between the expenditure survey and its use in the CPI. The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought.How is the CPI market basket determined? ▸.The Consumer Price Index (CPI) is a measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services.Consumer Price Index Frequently Asked Questions
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