Documents in the News -- Consumer Price Index

Being a Government Documents Librarian (and gov info junky) I was wide awake when on my morning radio news I heard mention of the Consumer Price Index and a desire to change how it's calculated resulting in a shift of the health of our economy.

For those that might not know anything of the Consumer Price Index here is a brief explanation. The Bureau of Labor Statistics defines the Consumer Price Index (CPI) as "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." The CPI is used in a variety of ways, most commonly as...

1. An Economic Indicator: It provides information about price changes in the nation's economy to government, business, labor, and other private citizens, and is used by them as a guide to making economic decisions. In addition, the President, Congress, and the Federal Reserve Board use trends in the CPI to aid in formulating fiscal and monetary policies.
2. A Deflator of other Economic Series: The CPI and its components are used to adjust other economic series for price changes and to translate these series into inflation-free dollars. An interesting example of this is the use of the CPI as a deflator of the value of the consumer's dollar to find its purchasing power, that is as prices increase, the purchasing power of the consumer's dollar declines.
3. A Means of Adjusting Dollar Values: The CPI is often used to adjust consumers' income payments, (for example, Social Security); to adjust income eligibility levels for government assistance; and to automatically provide cost-of-living wage adjustments to millions of American workers.

The CPI is typically represented by a very small number. The most recent release ("The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.3 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today") required an army of researchers visiting grocery stores, gas stations, retail sales outlets and reviewing electric, gas and water bills to compile a mass of data that was crunched down to 0.3 percent.

Redesigning how the CPI is calculated could potentially shave more than $200 billion off the U.S. deficit over the next decade. I'm not much of a mathematician or statistician, but I am a consumer and that's a lot of loaves of bread and tanks of gas.

Though the redesign is merely proposed you can guess that this documents librarian will have her ears open with the news on and will let you know what, if anything, becomes of the discussion.