Q: Is the Consumer Price Index figured differently now than, say, in the 1970s? I know the price of food, gas and some services are up, but there hasn't been an increase in Social Security in two or three years.
—Ron Atteberry, Lilburn
A: There have been several improvements to the way the Consumer Price Index (CPI) has been calculated over the years, according to the Bureau of Labor Statistics (BLS), the government agency that calculates the CPI. In 1978, the BLS enhanced its methods of selecting the goods and services to be included in the CPI sample. "The BLS has also improved its methods for introducing new goods and consumer expenditure patterns into the CPI sample in a more timely manner, and has improved its ability to measure changes in the quality of consumer goods and services," BLS economist Ken Stewart told Q&A on the News in an email. "The BLS has also improved its formulas for measuring consumer price change." For example, in 1999, the BLS adopted a "geometric mean" formula to measure price change within most CPI item categories. A supplemental measure of price change, called the chained CPI-U, was introduced in 2002 that was designed to more closely approximate a cost-of-living index. The chained CPI-U does not replace the measures of price change already produced by BLS, Stewart said. A list of many of these improvements can be found in Table 1 of chapter 17 of the BLS Handbook of Methods, which can be found at www.bls.gov/opub/hom/pdf/homch17.pdf.
Lori Johnston wrote this column. Do you have a question about the news? We’ll try to get the answer. Call 404-222-2002 or email q&a@ajc.com (include name, phone and city).
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