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How is the Consumer Price Index (CPI) Calculated?

The Consumer Price Index (CPI) is calculated using prices of sample goods from predetermined urban areas. According to the Bureau of Labor Statistics (BLS), the CPI is a product of a series of interrelated samples.

First, using data from the 1990 Census of Population, BLS selected the urban areas from which data on prices were collected and chose the housing units within each area that were eligible for use in the shelter component of the CPI. The Census of Population also provided data on the number of consumers represented by each area selected as a CPI price collection area.

Next, another sample (of about 14,500 families each year) served as the basis for a Point-of-Purchase Survey that identified the places where households purchased various types of goods and services.

Keywords: inflation, Bureau of Labor Statistics, Consumer Price Index (CPI), Point-of-Purchase Survey,