Consumer Price Index
The Consumer Price Index, or CPI as it is commonly known, is a monthly statistic released by the US Department of Labor Bureau of Labor Statistics which measures the average change over time of prices paid by urban consumers for goods and services.
The urban consumer group included in compiling this index represents approximately 87% of the population of the United States and includes spending patterns by professionals, self-employed individuals, the economically disadvantaged, the unemployed, retired individuals, wage earners and clerical workers. Not included are the spending patterns by residents of rural non-metropolitan areas, members of the military or individuals in prisons or mental institutions.
Consumer purchasing patterns where determined by the Bureau of Labor Statistics by conducting a detailed study of the purchasing patterns of 7,000 families from around the country over a period of 2 years in 2005 and 2006. During this study, family members were interviewed by survey on a quarterly basis on their spending patterns.
Another 7,000 families, during the same 2 year period, were asked to keep dairies of everything they purchased during a 2 week period.
The Bureau of Labor Statistics took the information obtained from this comprehensive review of interviews and dairies from families all around the country to assign importance to more than 200 item categories contained in the CPI Index.
How is the CPI Information obtained?
The CPI Index represents goods and services purchased by consumers in 8 Major Product Groups:
- Food and Beverages: this include everything from breakfast cereals to the costs of dining out
- Housing: includes the price of rent, mortgage payments, heating oil and gas, furniture
- Apparel: includes the cost of all clothing items
- Transportation: the price of a car, gasoline, airline fares, motor vehicle insurance
- Medical Care: the prices of prescription drugs, hospitals, doctor visits, eye care and medical supplies
- Recreation: costs of television, toys, pets, sports equipment, tickets to events
- Education and Communication: tuition, costs of telephone and cell phone services, computer software
- Other Goods and Services: the cost of a trip to the hair salon, personal services, funeral expenses
The CPI includes sales taxes that are paid for the purchase of a good or service but does not include Social Security or Income taxes. It also does not include investments items like the costs of stocks and bonds, real estate holdings or life insurance.
The Bureau of Labor Statistics hires individuals to visit retail stories, doctors’ offices, service businesses, rental units, etc. on a monthly basis to obtain information on the costs of over 80,000 items representing the range of goods and services purchased by consumers.
The index is then computed by the Bureau of Labor Statistics to indicate percentage increases in prices for the nation, regional areas of the country and select metropolitan areas.
The index itself is computed as a number with a base year cost established in a three year period between the years 1982–1984 represented in the index as 100. Subsequent CPI numbers computed are figured as an index showing the movement of prices in comparison to that base time period.
The index will not reflect all costs increases or decreases in every community since the size of the sample necessary to compute such an index would be huge. The actual experience may vary from county to county. The index does give decision makers a good indication on a regional and sometime metropolitan area basis, what the cost trends of goods and services has been over a period of time.
CPI-U Reports
There are 2 reports issued by the New York / Northern New Jersey Office of the Bureau of Labor Statistics that apply to New York State.
The CPI-U for the Northeast Region, reflects the changes in consumer prices for the states of Connecticut, Maine, Massachusetts, New Hampshire, New jersey, New York Pennsylvania, Rhode Island and Vermont and is more reflective of consumer price changes in the 40 counties outside the New York Metropolitan area.
The CPI-U for New York and Northern New Jersey is compiled for the New York City Metropolitan area and includes the 5 New York City Counties, Suffolk, Nassau, Westchester, Rockland, Putnam, Dutchess, and Orange Counties of New York, 14 counties in Northern New Jersey, 3 in Connecticut and 1 in Pennsylvania. This index is more reflective of the New York City Metropolitan area Consumer prices than the general Northeast Region Index.
For more information about the Consumer Price Index go to the Bureau of Labor Statistics website at:
or the New York New Jersey Information Office of the Bureau of Labor Statistics at
