What is it?
Also referred as “headline inflation”, the Consumer Price Index or CPI is a means to measure the weighted average of the goods and services that are purchased by consumers. The goods and services can be categorized in to eight groups and these are:
- Education and communication
- Food and Beverages
- Medical Care
The CPI’s statistical data include professionals, those who are self-employed, the poor, unemployed, and retired citizens of a country. Those who are not covered in the data are non-metro populations such as those who live on farms, the armed forces, and those who and serving in prisons and mental institutions.
Apart from this, the CPI is also used to assess the changes in prices and correlate them to the cost of living. This makes the CPI and ideal indicator in the identification of periods on deflation or inflation.
Calculation of Data
CPI is broken down by the Bureau of Labor Statistics and is based on a country’s region. Each month (depending on the country as some countries have yearly reports), reports are distributed to the four major Census regions mainly the Northeast, Midwest, South, and West. Along with the four major Census regions, there are also three major metro areas that present their reports. An example would be the United States whose three major metro regions are Chicago-Gary-Kenosha, Los Angeles-Riverside-Orange County, and New York-Northern New Jersey-Long Island.
The information from the reports provided are accompanied by an additional 11 more reports that are also provided every month and an additional 13 more from metro areas that provide their reports semi-annually. Reports presented cover areas that have big populations and are meant to represent a particular subset of a region.