Sunday , December 5 2021

Different CPIs

Summary:
A recent exchange [1] on Econbrowser regarding forecasts of CPI reminded me that — even among the official series — there’s more than one CPI. Figure 1: CPI-all urban (blue), and CPI-wage earners and clerical workers (red), s.a., in logs 2020M02=0. NBER defined recession dates shaded gray. Source: BLS, NBER and authors calculations. Figure 2: Year-on-year inflation rates for CPI-all urban (blue), and CPI-wage earners and clerical workers (red), s.a., calculated as log-differences. NBER defined recession dates shaded gray. Source: BLS, NBER and authors calculations. Inflation for the bundle that wage earners/clerical workers has outpaced that for all-urban, by about 0.6 ppts by September. Interestingly, the weights for the two CPI bundles indicate that wage earners/clerical workers

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A recent exchange [1] on regarding forecasts of CPI reminded me that — even among the official series — there’s more than one CPI.

Different CPIs

Figure 1: CPI-all urban (blue), and CPI-wage earners and clerical workers (red), s.a., in logs 2020M02=0. NBER defined recession dates shaded gray. Source: BLS, NBER and authors calculations.

Different CPIs

Figure 2: Year-on-year inflation rates for CPI-all urban (blue), and CPI-wage earners and clerical workers (red), s.a., calculated as log-differences. NBER defined recession dates shaded gray. Source: BLS, NBER and authors calculations.

Inflation for the bundle that wage earners/clerical workers has outpaced that for all-urban, by about 0.6 ppts by September.

Interestingly, the weights for the two CPI bundles indicate that wage earners/clerical workers have a higher weight on food, food away from home, and private transportation, and less weight on housing, than all urban consumers. As elevated housing costs feed into the CPI housing components, the places might switch.

Update, 6:30pm Pacific:

Barkley Rosser wonders about a CPI for those over age 62. There is, but it is a research — rather than official — series. See here for discussion of that BLS research series. I show that series, along with the research Harmonized Index of Consumer Prices (HICP) (BLS description here).

Different CPIs

Figure 3: CPI-all urban (blue), CPI for of 62 (crimson), both s.a., and Harmonized Index of Consumer Prices (HICP), n.s.a., all in logs 2020M02=0. NBER defined recession dates shaded gray. Source: BLS, NBER and authors calculations.

Note that while the HICP includes both rural and urban consumers, it excludes housing costs (and is not seasonally adjusted). In comparing the HICP to the CPI, one would want to use a CPI excluding shelter.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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