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.

  1. How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?

    Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the ... Read Answer >>
  2. Is the consumer price index (CPI) the best measure of inflation?

    Discover how the CPI is one of the most used indexes to measure inflation, but due to its limitations, the PPI and GDP deflator ... Read Answer >>
  3. Does the consumer price index (CPI) correlate with the change in price of goods and ...

    See why the consumer price index is a questionable proxy for inflation, and why it is unlikely to represent experiences with ... Read Answer >>
  4. What are some limitations of the consumer price index (CPI)?

    Explore some of the basic limitations of the widely used economic indicator, the consumer price index, or CPI, and examine ... Read Answer >>
  5. How is the cost of living index calculated?

    Discover how calculations for cost of living indexes are made based on the average prices of common goods and services between ... Read Answer >>
  6. What is the relationship between the PPI and the CPI?

    First, let's take a look at what these two acronyms mean: the PPI is the producer price index and the CPI is the consumer ... Read Answer >>
Related Articles
  1. Retirement

    Florida Retirement Hub The Villages is the Fastest Growing U.S. Metro

    Fatstest growing metros have significant chunks of retirees in their population.
  2. Insights

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.
  3. Insights

    How The Bureau Of Labor Statistics Works

    The Bureau of Labor Statistics (BLS) is the primary statistical agency for the U.S. federal government in labor economics and statistics.
  4. Investing

    Understanding Statistics

    Statistics provide the means to analyze data and then summarize it into a numerical form.
  5. Investing

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  6. Investing

    The Hidden Flaws of Index Investing

    Index investing isn't always better than active investing. Here's why.
  7. Trading

    4 Key Indicators That Move The Markets

    Find out what economic and market indicators to watch to anticipate and react to market movements.
  8. Investing

    CPI, Beige Book and Other Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  9. Insights

    The Top Ten Economic Indicators In The UK

    We list below ten key economic indicators for the United Kingdom, the world’s 6th-largest economy.
  1. Consumer Price Index For All Urban Consumers (CPI-U)

    A measure that examines the changes in the price of a basket ...
  2. S&P/Case-Shiller Home Price Indexes

    A group of indexes that tracks changes in home prices throughout ...
  3. Consumer Price Index For Urban Wage Earners And Clerical Workers - CPI-W

    A variation of the consumer price index, as complied by the Bureau ...
  4. ABCD Counties

    Categories of U.S. counties devised by AC Nielsen Company that ...
  5. Bureau of Labor Statistics – BLS

    A government agency that produces a range of economic data which ...
  6. Composite

    A grouping of equities, indexes or other factors combined in ...
Hot Definitions
  1. Debt/Equity Ratio

    The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  3. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  4. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  5. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  6. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
Trading Center