IS CPI, HOW IS IT FIGURED, AND WHY THE HECK DO I CARE?
Also known as CPI, the Consumer
Price Index is one of the most important benchmarks the
financial world watches. It is an inflationary indicator
that measures the change in the cost of a fixed basket of
products and services, including housing, electricity,
food, and transportation. Hence it is often referred to as
the cost-of-living index. The U.S. Department of Labor
publishes the Consumer Price Index every month. The main
page contains an overview, frequently asked questions,
news releases, and contact information. Current data
includes both All Urban Consumers (CPI-U) and Urban Wage
Earners and Clerical Workers (CPI-W).
The U.S. Department of labor
has developed an imaginary shopping cart. They have tried
to determine how the average person will spend money for a
one month period. All of these items are listed in the
link below, and the chart shows how much weight is given
to each item relative to "100". How does your spending
stack up with the "average"? It is the CPI-W
that they use to work out our COLA.
It is the cumulative monthly
average of these CPI reports that determines whether our
U.S. Social Security checks increase.
Click to see the 6-page list, if you have the stomach!
These pages will show exactly which consumer items are
considered in figuring the CPI-W, and thus our COLA. (.pdf file, requires free
Does the CPI reflect what Seniors must actually spend?
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