United States of America
In the USA, CPI figures are prepared monthly by the Bureau of Labor Statistics of the United States Department of Labor.
The CPI-U includes expenditures by all urban consumers. The CPI-W includes expenditures by consumer units with clerical workers, sales workers, craft workers, operative, service workers, or laborers. Recently, the Chained Consumer Price Index C-CPI-U, a chained index, was introduced. The C-CPI-U tries to mitigate the substitution bias that is encountered in CPI-W and CPI-U by employing a Tornqvist formula and utilizing expenditure data in adjacent time periods in order to reflect the effect of any substitution that consumers make across item categories in response to changes in relative prices. The new measure, called a "superlative" index, is designed to be a closer approximation to a "cost-of- living" index than the other measures. The use of expenditure data for both a base period and the current period in order to average price change across item categories distinguishes the C-CPI-U from the existing CPI measures, which use only a single expenditure base period to compute the price change over time. In 1999, the BLS introduced a geometric mean estimator for averaging prices within most of the index’s item categories in order to approximate the effect of consumers’ responses to changes in relative prices within these item categories. The geometric mean estimator is used in the C-CPI-U in the same item categories in which it is now used in the CPI-U and CPI-W.
The CPI has powerful political ramifications, and administrations of both parties have been tempted to change the basis for its calculation. Especially since 1980, the definition of CPI has been altered repeatedly, though economists disagree whether the index underestimates or overestimates the true rate of decline in purchasing power.
Read more about this topic: Consumer Price Index By Country
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