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

What Is the Consumer Price Index for All Urban Consumers (CPI-U)?

The Consumer Price Index For All Urban Consumers (CPI-U) measures changes in U.S. consumer prices in view of a representative basket of goods and services. The term urban in the index alludes to areas around any city or town with a population of something like 10,000. As a result, CPI-U covers 93% of the U.S. population. Data is incorporated by the U.S. Bureau of Labor Statistics, which publishes the index consistently.

Understanding the Consumer Price Index for All Urban Consumers (CPI-U)

Consumer Price Index (CPI) is the most widely refered to indicator of inflation or deflation. CPI-U is most frequently essentially called CPI and is the index referred to by headlines in the news. The connected CPI-W index covers the 29% of U.S. population in households depending overwhelmingly on income from clerical and hourly wage occupations. CPI-W is used principally to calculate cost-of-living adjustments for federal benefits, and to index income tax brackets for inflation.

CPI-U depends on a deductively chose random sample of 94,000 prices collected month to month from retail and service foundations by the BLS. Rental housing prices and the imputed shelter costs for homeowners are calculated from a separate survey of 8,000 rental housing units.

The prices are adjusted for changes in product quality or features, and CPI indexes for every category of product or service are calculated in a way that allows for substitution effects — the propensity of consumers to look for alternatives as prices rise. For instance, rising meat prices could cause customers to buy not so much hamburger but rather more chicken.

CPI-U weights the products and services prices in light of consumer spending designs derived from a separate survey. The index includes tables showing month to month price changes for a wide assortment of spending categories, from babies' and little children's apparel to funeral expenses. The change for every category is furnished with and without seasonal adjustments considering seasonal pricing designs.

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The CPI-U increase in May 2022 on a seasonally adjusted basis. The CPI-U was up 8.6% for the 12 months through May, which addresses the biggest increase for a year period since the term ending December 1981.

Special Considerations

This index has a few unique uses, which rely completely upon the entity using it. For example, financial markets use CPI-U trends to evaluate inflation while Federal Reserve policymakers use the report to examine the adequacy of monetary policy. Business executives, labor leaders, and consumers likewise use the CPI-U (and other CPI data) as a guide to going with economic choices. The CPI-U is likewise used to adjust other economic data at changes in costs, and to introduce them on an inflation-adjusted basis.

Published during the second week of the month for the prior month, the CPI-U is subject to significant short-term fluctuations. But in setting with the definite data, prior reports and other economic releases the CPI-U is a basic gauge of the trend in consumer prices.

Features

• Limited to households draw income essentially from hourly wage and clerical positions, which is used to calculate cost-of-living adjustments for federal payments including Social Security.
• CPI-U is distinct from the CPI-W index, which covers 29% of the U.S. population.
• The Consumer Price Index For All Urban Consumers measures the month to month change in consumer prices for a representative basket of goods and services.
• CPI-U measures inflation and is an indicator of the adequacy of government fiscal and monetary policies.
• CPI-U is the headline Consumer Price Index, which covers 93% of the U.S. population.