A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
The price index excluding tobacco is used to index link many private contracts, alimony, annuities and also the minimum wage (SMIC). The index used for the SMIC is that of the "Households that belong to the lowest equivalized disposable income quintile, excluding tobacco". As of the dissemination of the consumer price index for January 2016, INSEE published a new index with the 2015 base = 100 to replace the 1998 base = 100. This renewed index is the eighth generation of indices since 1914.
CPI Regional Data
The Bureau of Labor Statistics also breaks down the CPI based on regions. Each month, the report is broken out into the four major Census regions: Northeast, Midwest, South and West. Three major metro areas are also broken out each month. The regions are Chicago-Gary-Kenosha, Los Angeles-Riverside-Orange County and New York-Northern NJ-Long Island.
Along with the regional information provided each month, the Bureau of Labor Statistics also publishes reports for 11 additional metro areas every other month and an additional 13 metro areas semi-annually. These reports cover areas with large populations and represent a particular region subset.
What does CPI indicate?
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.
How is it calculated?
It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
How do you calculate the consumer price index?
Divide the price of the basket of goods in the year for which you are calculating CPI by the price of the basket of goods in the base year and multiply the result by 100 to calculate the CPI in that year.
What Is in the CPI?
The CPI statistics cover professionals, self-employed, poor, unemployed and retired people in the country. People not included in the report are nonmetro populations, farm families, armed forces, and people serving in prison and those in mental hospitals.
The CPI represents the cost of a basket of goods and services across the country on a monthly basis. Those goods and services are broken into eight major groups:
- Food and beverages
- Medical care
- Education and communication
- Other goods and services