Loading the player...

What is 'Consumer Price Index For All Urban Consumers (CPI-U)'

The Consumer Price Index For All Urban Consumers (CPI-U) measures the changes in the price of a basket of goods and services purchased by urban consumers. The urban consumer population is deemed by many as a better representative measure of the general public because most of the country's population lives in highly populated areas, which represent close to 90 percent of the total population.

BREAKING DOWN 'Consumer Price Index For All Urban Consumers (CPI-U)'

CPI is the most frequently used statistic for identifying inflation or deflation. The Consumer Price Index For All Urban Consumers only considers the prices paid for goods and services by those that live in urban areas. Rising CPI-U figures means that the prices of goods/services within the urban population are becoming more expensive and can be a sign of rising inflation.

All variants of the CPI are similar to cost of living indexes as they assess prices in the market based on the goods and services needed to achieve a given standard of living. Different measures of CPI differ from cost of living indexes because they do not account for changes in other facets of standard of living, such as changes in environmental factors.

The all-urban consumer population consists of all urban households in Metropolitan Statistical Areas (MSAs) and in urban places of 2,500 inhabitants or more. Non-farm consumers living in rural areas within MSAs are included, but the index excludes rural consumers and the military and institutional population. The Consumer Price Index for All Urban Consumers was introduced in 1978 is representative of the buying habits of approximately 80 percent of the non-institutional population of the United States, compared with 32 percent represented in the CPI-W. The methodology for producing the index is the same for both populations.

Uses of The Consumer Price Index For All Urban Consumers

CPI-U is used to measure inflation and operates as an indicator of the effectiveness of government fiscal and monetary policy. Business executives, labor leaders, and other private citizens also use the CPI-U (and other CPI components) as a guide in making economic decisions. CPI-U is also used to adjust other economic series for price change and to translate those series into inflation-free dollars.

CPI-U and its other CPI components are also used means for indexing populations. For example, over 2 million workers are covered by collective bargaining agreements which tie wages to the CPI or CPI-U. Changes in the CPI-U can also affect the cost of lunches for the 26.7 million children who eat lunch at school. Some private firms and individuals use the CPI to keep rents, royalties, alimony payments and child support payments in line with changing prices.

RELATED TERMS
  1. Urban Development Act Of 1970

    Urban Development Act Of 1970 is legislation that introduced ...
  2. Metropolitan Statistical Area (MSA)

    Metropolitan statistical areas (MSA) are regions with largely ...
  3. Basket Of Goods

    A basket of goods is a fixed set of consumer products and services ...
  4. ACCRA Cost Of Living Index - COLI

    The ACCRA Cost of Living Index provides a benchmark for comparing ...
  5. Consumer Sentiment

    Consumer sentiment is astatistical measurement and economic indicator ...
  6. Indexing

    In the financial markets, indexing can be used as a statistical ...
Related Articles
  1. Investing

    How Leaving the S&P 500 Affects Urban Outfitters

    Urban Outfitters will be removed from the index due to its falling market cap. Is this a red flag for investors?
  2. Investing

    Shield Your Portfolio From Inflation For Real Returns

    Inflation-protected securities are part of the equation, but they're not a perfect solution.
  3. Insights

    Deadly Flaws in Major Market Indicators

    These indicators give investors and experts some data to work with, but they're far from perfect.
  4. Retirement

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

    Fatstest growing metros have significant chunks of retirees in their population.
  5. Financial Advisor

    3 Reasons to Invest in Asia's Emerging Markets

    Emerging markets in Asia aren't on the rise at the moment, but they're best days are likely to be in the future. Here's why.
  6. Investing

    Urban Outfitters Stock Drops on Departure of President

    David McCreight opened 60 new stores and grew revenue by over 35% during his six-and-a-half year stint as Anthropologie’s CEO.
  7. Insights

    4 Global Economic Issues of an Aging Population

    Discover why dramatic increases in life expectancy is creating significant socioeconomic challenges for many advanced industrialized nations.
  8. Investing

    Smart Cities: Companies Profiting from Urban Challenges

    Smart cities are applying technology to manage swelling populations and strained services. See who will benefit most from the trend.
  9. Insights

    How Inflation Rates Impact Your Retirement Savings

    Understanding the risks and likely rate of inflation can help investors craft a strategically, well-diversified retirement portfolio.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What is the relationship between the PPI and the CPI?

    CPI and PPI calculate the change in price of a set of goods and services, but there are two fundamental differences between ... Read Answer >>
  4. How does the current cost of living compare to 20 years ago?

    Find out how inflation has affected the dollar since 1998, and how the cost of living has changed above and beyond what can ... Read Answer >>
Trading Center