The consumer price index (CPI) is a common metric used to track and monitor price changes for frequently purchased consumer goods and services. It stands as a measurement of inflation for economics analysts or individual consumers, and it can provide valuable insight into price increases or decreases across a broad range of categories. The CPI is based on government statistics drawn from both large sample sets of the population in addition to more concentrated regional and area consumer purchasing data. Depending on what type of analysis one is performing, one index of price data may be more suitable than another.

CPI Published Areas

The Bureau of Labor Statistics (BLS) publishes national level data on price changes each month; these are known as U.S. city averages. Most analysts use this broad index as an indicator in economic movement and overall price changes through the country, but thousands of other indexes are provided to the public that can be used to obtain more detailed price change trends and information about inflation. In addition to national CPI data, government statistics are also provided by region on a monthly basis, including data for the Northeast, Midwest, South and West. Regional CPI data is broken down further into more concentrated sets based on population size, indicated by classes A, B/C and D. Class A includes metropolitan areas with more than 1.5 million residents, class B/C includes smaller metropolitan areas with populations less than 1.5 million, and class D represents regions that are considered urban or non-metropolitan.

In addition to area indexes, price information on consumer goods and services is available for 26 specific metropolitan areas that include suburbs and counties across state borders. Chicago-Gary-Kenosha, IL-IN-WI, Los-Angeles-Riverside-Orange County, CA and New York-Northern New Jersey-Long Island, NY-NJ-CT-PA are the three largest metropolitan area indexes, and they are published on a monthly basis. A number of smaller metropolitan areas, such as Atlanta, Georgia, Dallas-Fort Worth, Texas, and Washington-Baltimore, DC-MD-VA-WV are also provided on a bi-monthly basis. Indexes that are published semi-annually include even smaller areas, such as Kansas City-MO-KS and Minneapolis-St. Paul, MN-WI.

For national, regional and area indexes, the consumer price index distinguishes between two consumer groups: all urban consumers (CPI-U) and all urban wage earners and clerical workers (CPI-W). The former represents the broadest sample of the population, including nearly 87% of all working professionals, self-employed individuals, retirees and the unemployed. The latter is a subset of the CPI-U, comprised of hourly wage earners and clerical workers representing only 32% of the population.

When to Use Various CPI Indexes

Individuals who do not live within one of the concentrated metropolitan areas for which data is published regularly may want to use the national level index under the CPI-U distinction to interpret changes in economics and inflation. This captures the widest range of price change data. However, the U.S. city averages index uses data that is adjusted for seasonal effects, which can create a skewed picture of true price movements over a short period of time. Conversely, regional and area indexes do not use seasonally adjusted data, so they may be more appropriate to use for escalation purposes or to gain detailed insight into price movements. Ultimately, the individual utilizing CPI data has discretion over what index is used.

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