Attachment Jd - Portfolio CPI Facts Brochure

The three surveys used in the
construction of the CPI
Consumer Expenditure Survey (CE) — This

household survey, conducted by the U.S. Census
Bureau for BLS, provides information on the
buying habits of American consumers. More
than 7,000 families from around the country
provide information each calendar quarter on
their spending habits in the Quarterly Interview
Survey, and another 7,000 families complete
expense diaries in the Diary Survey each year.
The data collected from these surveys are used to
calculate the relative importance of items in the
market basket. The CE also provides the list

of retail establishments, such as grocery
stores, department stores, doctor’s offices,
theaters, internet sites, etc., where the prices
of consumer goods and services are
monitored by the Commodities and Services
Pricing Survey.
Housing Survey — This survey, conducted by

BLS, is used to obtain rent prices in each CPI
sampling area. Roughly 50,000 rental units are
priced every 6 months. Rent and the estimated
rental value of owned homes constitute more than
30 percent of the total CPI market basket.

Commodities and Services
Pricing Survey — This survey, conducted by

BLS, is used to obtain the prices of consumer
goods and services in retail establishments
(identified by CE) for the market basket items.
Each month, BLS data collectors visit or call
thousands of retail stores, service establishments,
and other businesses all over the United States to
obtain price information on about 80,000 items.

Effects of the CPI

Facts
about the
Consumer
Price Index
(CPI)

 The CPI can be used to measure and compare
consumers’ purchasing power in different time
periods. As prices increase, the purchasing
power of a consumer’s dollar declines, and as
prices decrease, the consumer’s purchasing
power increases.
 The CPI is often used to adjust consumers’
income payments. For example, the CPI is
used to adjust Social Security benefits, to adjust
income eligibility levels for government assistance,
and to automatically provide cost-of-living wage
adjustments to millions of American workers.
 The CPI affects more than 100 million persons
as a result of statutory action:
Over 50 million Social Security beneficiaries
About 20 million food stamp recipients in the
Supplemental Nutrition Assistance Program
(SNAP)
Around 4.2 million military and Federal
Civil Service retirees and survivors
30 million children who receive lunch
through the National School Lunch Program
(NSLP)
Over 2 million workers covered by collective
bargaining agreements that tie wages to
the CPI
 The CPI is used to adjust the Federal income
tax brackets. These adjustments prevent inflation induced increases in tax rates, an effect called
“bracket creep.”

For further information contact:
Consumer Price Index www.bls.gov/cpi/

U.S. Bureau of Labor Statistics

When are CPI data released?

What is the market basket
of goods?

The CPI represents all goods and services
purchased for consumption by the population.
These expenditure items fit into hundreds of
subcategories arranged into eight major groups.
Major groups and examples of categories in
each are as follows:

• FOOD AND BEVERAGES  – breakfast

What is the CPI?

The Consumer Price Index (CPI) is a measure
of the average change over time in the prices
paid by urban consumers for a market basket
of consumer goods and services. The CPI,
produced by the Bureau of Labor Statistics
(BLS), provides a way to measure the average
price change experienced by consumers from
month to month.

What does the CPI measure?

The CPI measures inflation. It is an estimate
of the average increase (or decrease) in the
prices paid by the “average” urban consumer in
the United States for a representative basket of
consumer items. The basket includes food and
beverages, housing (including an estimated
rental value of owned homes), apparel,
transportation, medical care, recreation,
education and communication, and other goods
and services.

cereal, milk, coffee, chicken, wine, and full
service meals and snacks

• HOUSING – rent of primary residence,

owners’ equivalent rent, fuel oil, and bedroom
furniture

• APPAREL – men’s shirts and sweaters,
women’s dresses, and jewelry

• TRANSPORTATION  – new vehicles, airline
fares, gasoline, and motor vehicle insurance

• MEDICAL CARE  – prescription drugs

and medical supplies, physicians’ services,
eyeglasses and eye care, and hospital services

• RECREATION  – televisions, toys, pets and

pet products, sports equipment, and admissions

• EDUCATION AND COMMUNICATION  –

college tuition, postage, telephone services, and
computer software and accessories

• OTHER GOODS AND SERVICES  – tobacco

and smoking products, haircuts and other
personal services, and funeral expenses

The CPI is released every month, usually during
the third week of the month. For example,
the CPI released the third week in March
represents data for February of that year. BLS
also releases annual average indexes for the
previous calendar year every January.

Are CPI data published only at
the national level, or are regional
level data available, too?

CPI data are available at national, regional, and
metropolitan-area levels. BLS publishes the
national (or U.S. City Average) CPI monthly.
Indexes based on census regions and three
major metropolitan areas (Los Angeles, New
York City, and Chicago) also are published
monthly. Further, BLS publishes CPI indexes
for 11 other major metropolitan areas every
other month.

Why is the CPI important?

The CPI is the most widely used measure
of inflation and is sometimes viewed as an
indicator of the effectiveness of government
economic policy. The CPI provides information
about price change in the Nation’s economy to
government, business, labor, and other private
citizens, who use the CPI as a guide in making
economic decisions. In addition, the CPI may
be used by policy makers as a consideration in
monetary and fiscal policy decisions. The CPI
and its components also are used to adjust other
economic series for price change and to translate
these series into inflation-free dollars. Examples
of series adjusted by the CPI include retail sales,
hourly wages and earnings, and components of
the National Income and Product Accounts,
such as the Gross Domestic Product (GDP).

What do the Consumer Expenditure
(CE) Diary Survey and Quarterly
Interview Survey provide for
the CPI?

The Consumer Expenditure Diary Survey and
Quarterly Interview Survey provide BLS with
expenditure data needed to construct the market
basket of goods and services for the CPI. BLS
then selects goods and services based on this
data, and the expenditure data are used with the
prices collected to calculate the CPI. The CE
also collects information on where consumers
shop, which are used to determine where to
collect prices.