Attachment K(d) - CPI Fact 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
identify the price of rent in each CPI sampling
area. Roughly 50,000 rental units are priced
in each 6-month period. Rent and owner’s
equivalent rent 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.

Facts about
the Consumer
Price Index
(CPI)

Effects of the 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
Supplemental Nutrition Assistance Program
(SNAP)
 Around 4.2 million military and Federal
Civil Service retirees and survivors
 30 million children who eat lunch at school
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

CE-250
(04/2023)

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 cereal,

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

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 faced 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), clothing,
transportation, medical care, recreation,
education, communication services, and other
goods and services.

•  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 is 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 is 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.