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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

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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