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131 Monthly Lab. Rev. 19 (2008)
The Experimental Consumer Price Index for Elderly Americans (CPI-E): 1982-2007

handle is hein.journals/month131 and id is 481 raw text is: The experimental consumer price index for elderly Americans (CPI-E): 1982-2007 Over the 25 years from December 1982 to December 2007, the experimental consumerprice index for Americans 62 years of age and older (CPI-E) rose somewhat./ister than the CPI-U and the CPI-W, mainly because pricesfor medical care and shelter, which are Weighted more heavily in the CPI-E, increased more rapidly than overall inflation during the period he Consumer Price Index (CPI) mea- sures the average change over time in the prices paid by urban consumers for a representative market basket of con- sumer goods and services. The Bureau of Labor Statistics (t31S) publishes measures of price change for two official population groups. The Consumer Price Index for All Urban Consumers (CPI-U) represents the spending habits of about 87 percent of the population of the United States,' and the Consumer Price Index for Urban Wage Earners and Clerical \Workers (CPI-w), a subset of the CPI-U population, represents about 32 percent of the U.S. population. As the U.S. population ages, policymak- ers have become increasingly interested in issues facing older Americans.2 In 1987, Congress directed B1S to begin calculating a consumer price index for the elderly. In response, BLS developed an experimental consumer price index for Americans 62 years of age and older. Commonly called the CPI-E, the index was reconstructed to 1982; hence, CPI-E data are now available for 25 years, from December 1982 through December 2007. ihe experimental CPI-E has moved some- what differently than the CGl-U and the CPI-W over the last quarter century. From December 1982 to December 2007, the experimental CPI-E rose 126.5 percent, compared with increases of 115.2 percent for the CPI-U and 110.0 percent for the C1El W. That translates into average annual increases of 3.3 percent, 3.1 percent, and 3.0 percent for the CPI-EF, CPI-lU, and CPI-W, respectively. Methodological limitations of the CPI-E Although the CPI-E indicates a higher overall inflation rate for older Americans compared with the C PI-U and the cPI-W, because it is an experimental index, any conclusions drawn from these data should be treated with can- tion.' This section summarizes the various limitations inherent in the methodology used to construct the G-E. The first methodological limitation is that the expenditure weights used in the CPI-E are subject to higher sampling error than those used for the official consumer price indexes. For each CPI population group, the CPI is currently divided into 211 item categories and 38 geographic areas. Each item-area combination is weighted according to its im- portance in the spending patterns of the re- spective population. The population of older Americans used in the C1-E is coimposed of all urban noninstitutionalized consumer units that Ifleet one of the following three conditions: Monthly Labor Review - April 2008 19 Kenneth J. Stewart Kenneth J. Stewart is an economist in the Division of Consumer Prices and Price Indexes, Bureau of Labor Statistics. E-mail: stewart ken@bls.gov

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