# What Are The Limitations In The Construction Of Index Number?

Limitations of Index Numbers

They are simply rough indications of the relative changes. The choice of representative commodities may lead to fallacious conclusions as they are based on samples. There may be errors in the choice of base periods or weights, etc. Comparisons of changes in variables over long periods are not reliable. They may be useful for one purpose but not for another. They are specialized types of averages and hence are subject to all those limitations which an average suffers from.

: Limitations of Index Numbers

## Which is a limitation of index number *?

Limitations of Index Number Homework Help in Statistics Despite the importance of the index numbers in studying the economic and commercial activities, and in measuring the relative changes in the price level as the economic barometers, they suffer from certain limitations for which they should be very carefully used and interpreted. The following are some of the chief limitations among others:

They are only approximate indicators of the change of a phenomenon viz. price level, quantity level, const of living, production activity etc. They never exactly represent the changes in the relative level of a phenomenon. This is because; the index numbers are constructed mostly on the sample data. They are liable to be misused by a statistician with certain ulterior motive. If, purposively a wrong base year has been chosen, irrational weights have been assigned, inappropriate average has been used or irrelevant items have been included in the construction of an index number, the result would be highly misleading and fallacious. They are prone to embrace errors at each and every stage of construction viz.:

(i) Selection of the items and their numbers(ii) Obtaining the price quotations(iii) Selection of the base period(iv) Assignment of weights(v) Choice of the formula.

They are liable to misrepresent the true picture of a phenomenon, if he limited number of items chosen are not representative of the universe. They are not capable of reflecting properly the relative changes in the quality level of the products which very much change in modern times. They are not capable of being used for any other purpose than the one for which they have been constructed particularly. Thus, a wholesale price index number cannot measure the cost of living, or an index number of production cannot measure productivity of a particular industry. There is no such formula of index number which is absolutely free from errors and limitations. Even, the Fisher’s ideal formula does not satisfy certain tests of consistency viz. circular test. Similarly, Laspeyre’s formula suffers from upward bias and Paasche’s from downward bias.

: Limitations of Index Number Homework Help in Statistics

### What are the limitation of statistics?

On heterogeneous data, statistics cannot be implemented. In gathering, analyzing, and interpreting the data, if adequate care is not taken, statistical findings can be misleading. Statistical data can be treated effectively only by a person who has professional knowledge of statistics.

### What do you mean by an index number explain its uses and limitations?

Index numbers are meant to study the change in the effects of such factors or variable (or a group of variables) over a specified time, which cannot be measured directly. Following types of index numbers are generally used: i. Price Index Numbers: These index numbers show changes in the wholesale or retail prices. ii.

## What is an index number point out its utility and limitations?

An index number in statistics is a tool that we generally use to measure the difference in relative changes from time to time. The difference can also be from place to place. It can be thought of as the arithmetic mean that we use to find or represent some values of a particular data set.

## What are the limitations of national income as an index of development?

Limitations of per capita income are : (i) A rise in per capita income is due to rise in prices and not due to increase in physical output, it is not a reliable index of economic development. (ii) National income rises but its distribution makes the rich richer and the poor poorer.

(iii) It excludes all non-marketed goods and services, even though they may be important for human happiness and better quality of life. (iv) Rise in per capita income may be due to use of modern capital intensive technology in production which may be labour displacing in nature thus adversely affecting the poor masses.

(v) If rate of population growth, is higher than the rate of growth of national income, this will lead to fall in per capita availability of goods and services and economic welfare. (vi) Contribution of commodity to economic welfare may be higher than its money value e.g., money value of salt, needle, thread, etc.

### How are the index number constructed?

This is a simple method for constructing index numbers. In this, the total of current year prices for various commodities is divided by the corresponding base year price total and multiplying the result by 100. p Σ = the total of same commodity prices in the base year.

### What is index number for Class 12?

An index number is a statistical device for measuring changes in the magnitude of a group of related variables. It represents the general trend of diverging ratios, from which it is calculated. It is a measure of the average change in a group of related variables over two different situations.

#### What are the problems associated with index number?

Problem # 7. Comparability: – Index numbers of different places are hardly comparable. The significance of prices to consumption varies according to taste, habits, climate, etc. The cost of living index number of London will include coal prices as an important item.

In Calcutta and Bombay they are not important. Hence, a comparison of the cost indices of these places is meaningless. Conclusion: On account of the various difficulties associated with their construction, little importance can be attached to index numbers for com­paring price changes over long periods of time.

The further from the base year, the more inaccurate is the index number likely to become, for the basket is more liable to change. Moreover, since patterns of expenditure vary in different localities and different countries, an index number has very limited value in comparing price changes in different places.

Nevertheless, despite its limitations, an index number is the best means of measuring short-term changes in the level of prices of the particular group of commodities selected. So the conclusion is : index numbers are very useful when used properly but can make little sense if used in igno­rance of their true meaning.

: 7 Major Problems of Index Numbers | Inflation

### What are the limitations of a study?

The limitations of the study are those characteristics of design or methodology that impacted or influenced the interpretation of the findings from your research.

#### Which of the following is the limitations of statistics Mcq?

Some limitations of Statistics are as follows : It does not deal with individuals. It does not deal with qualitative data. Statistical laws are true only on an average.

#### What are the limitation to the use of price indices in business?

Limitation # 3. Problems of Change: – In a rapidly changing economy, the structure of any index is liable to become seriously out of date unless there is frequent revision of items and weights. New products coming on to the market may have to be added to the list of items or substituted for other items no longer in demand.

#### What are index numbers Class 11 economics?

An index number is a statistical device for measuring changes in the magnitude of a group of related variables. It represents the general trend of diverging ratios, from which it is calculated.

### What are the features of index number Class 11?

Features of Index numbers are: Average: They predict or represent the changes that take place in terms of averages. Quantitative: They offer the accurate measurement of quantitative change. Measures of relative changes: they measure relative changes over time.

### What is class 11 index number?

Ii. Quantity Index Numbers: These index numbers measure changes in the volume or quantity of goods. iii. Aggregate Index Numbers: These index numbers are used to measure changes in a phenomenon like cost of living, industrial production etc.

#### What are the limitations of the consumer price index?

1. What is the CPI? ▸
• The Consumer Price Index (CPI) is a measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services.
2. How is the CPI market basket determined? ▸
• The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought. There is a time lag between the expenditure survey and its use in the CPI. For example, CPI data in 2020 and 2021 was based on data collected from the Consumer Expenditure Surveys for 2017 and 2018. In each of those years, about 24,000 consumers from around the country provided information each quarter on their spending habits in the interview survey. To collect information on frequently purchased items, such as food and personal care products, another 12,000 consumers in each of these years kept diaries listing everything they bought during a 2-week period. Over the 2 year period, then, expenditure information came from approximately 24,000 weekly diaries and 48,000 quarterly interviews used to determine the importance, or weight, of the item categories in the CPI index structure.
3. How is the CPI sample created? ▸
• A particular item enters the CPI sample through a process called initiation. This initiation process, typically carried out in person by a CPI data collector, involves selecting a specific item to be priced from the category that has been designated to be priced at that store. For example, suppose a particular grocery store has an outlet where cheese will be priced. A particular type of cheese item will be chosen, with its likelihood of being selected roughly proportional to its popularity. If, for example, cheddar cheese in 8 oz. packages makes up 70 percent of the sales of cheese, and the same cheese in 6 oz. packages accounts for 10 percent of all cheese sales, and the same cheese in 12 oz. packages accounts for 20 percent of all cheese sales, then the 8 oz. package will be 7 times as likely to be chosen as the 6 oz. package. After probabilities are assigned, one type, brand, and container size of cheese is chosen by an objective selection process based on the theory of random sampling. The particular kind of cheese that is selected will continue to be priced each month in the same outlet. This item will be repriced, monthly or bimonthly, until it is replaced after four years through sample rotation. Repricing is usually done in person, but may be done via telephone or the internet. The process of selecting individual quotes results in the sample as a whole containing a wide variety of specific items of a category roughly corresponding to consumer purchases. So the cheese sample (or the new vehicle sample, the television sample, etc.) contains a wide variety of styles and brands of cheese, vehicles, televisions, etc.
4. How is the CPI calculated? ▸
• The CPI is a product of a series of interrelated samples. First, using data from the U.S. Census we select the urban areas from which data on prices are collected. Next, a sample of data from the Conumer Expenditure Survey identifies the places where households purchase various types of goods and services, forming the basis for the CPI outlet sample. Also using data from the Consumer Expenditure Survey, BLS statisticians assign quotes in the CPI item categories to specific outlets. A specific item is then chosen for selection using a process which bases the probability of selection for an item on the share the item composes within the outlet’s revenue in that item category. Recorded price changes are weighted by the importance of the item in the spending patterns of the appropriate population group. The combination of carefully selected geographic areas, retail establishments, commodities and services, and associated weight, gives a weighted measurement of price change for all items in all outlets, in all areas priced for the CPI. Additional information on how the CPI is calculated is available in the CPI section of the BLS Handbook of Methods,
5. How is the CPI used? ▸
• The CPI affects nearly all Americans because of the many ways it is used. Some examples of how it is used follow:
• As an economic indicator. The CPI is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy. It provides information about price changes in the Nation’s economy to government, business, labor, and 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.
• As 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. Examples of series adjusted by the CPI include retail sales, hourly and weekly earnings, and components of the National Income and Product Accounts. The CPI is also used as a deflator of the value of the consumer’s dollar to find its purchasing power. The purchasing power of the consumer’s dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. In other words, as prices increase, the purchasing power of the consumer’s dollar declines.
• As 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. As a result of statutory action, the CPI affects the income of millions of Americans. Over 50 million Social Security beneficiaries, and military and Federal Civil Service retirees, have cost-of-living adjustments tied to the CPI. Another example of how dollar values may be adjusted is the use of the CPI to adjust the Federal income tax structure. These adjustments prevent inflation-induced increases in tax rates. In addition, eligibility criteria for millions of food stamp recipients, and children who eat lunch at school, are affected by changes in the CPI. Many collective bargaining agreements also tie wage increases to the CPI.
6. Whose buying habits does the CPI reflect? ▸
• The CPI reflects spending patterns for each of two population groups: all urban consumers and urban wage earners and clerical workers. The all urban consumer group represents about 93 percent of the total U.S. population. It is based on the expenditures of almost all residents of urban or metropolitan areas, including professionals, the self-employed, the unemployed, and retired people, as well as urban wage earners and clerical workers. Not included in the CPI are the spending patterns of people living in rural nonmetropolitan areas, those in farm households, people in the Armed Forces, and those in institutions, such as prisons and mental hospitals. Consumer inflation for all urban consumers is measured by two indexes, namely, the Consumer Price Index for All Urban Consumers (CPI-U) and the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is based on the expenditures of households included in the CPI-U definition that also meet two additional requirements: more than one-half of the household’s income must come from clerical or wage occupations, and at least one of the household’s earners must have been employed for at least 37 weeks during the previous 12 months. The CPI-W population represents about 29 percent of the total U.S. population and is a subset of the CPI-U population. The CPI does not necessarily measure your own experience with price change. It is important to understand that BLS bases the market baskets and pricing procedures for the CPI-U and CPI-W populations on the experience of the relevant average household, not of any specific family or individual. For example, if you spend a larger-than-average share of your budget on medical expenses, and medical care costs are increasing more rapidly than the cost of other items in the CPI market basket, your personal rate of inflation may exceed the increase in the CPI. Conversely, if you heat your home with solar energy, and fuel prices are rising more rapidly than other items, you may experience less inflation than the general population does. A national average reflects millions of individual price experiences; it seldom mirrors a particular consumer’s experience. Additional information on this topic is available in the Why the Published Averages Don’t Always Match an Individual’s Inflation Experience factsheet,
7. What types of data are published? ▸
• Many types of data are published as outputs from the CPI program; the most popular are indexes and percent changes. Requested less often are relative importance (or relative expenditure weight) data, base conversion factors (to convert from one CPI reference period to another), seasonal factors (the monthly factors used to convert unadjusted indexes into seasonally adjusted indexes), and average food and energy prices. Index and price change data are available for the U.S. city average (or national average), for various geographic areas (regions and metropolitan areas), for national population-size classes of urban areas, and for cross-classifications of regions and size classes. Indexes for various groupings of items are available for all geographic areas and size classes. Index levels are published along with short-term percent changes and 12-month percent changes. At the national item and group level, unadjusted and (where appropriate) seasonally adjusted percent changes are also published. Average prices for select utility, automotive fuel, and food items are published at the U.S. level each month. If the sample size is sufficient, all average prices are also published monthly at the regional level. Average prices for utility gas, electricity, and automotive fuel prices are also published at the size class and area level.
8. How is the CPI used by the Social Security Administration(SSA) to calculate Cost of Living Adjustments (COLAs) for Social Security recipients? ▸
• Congress amended the Social Security Act of 1935 with public law 92-336 in 1973.Part of that amendment called for automatic annual cost of living increases to be made to Social Security payments based on the CPI. The COLA is defined as the percent increase between the third quarter average of the CPI-W for a given year and the previous peak third-quarter average of the CPI-W. BLS calculates the CPI-W and other CPI series, but we do not determine policy regarding how these series are used by other agencies, nor are we involved in making or adjusting Social Security payments. Additional information about the COLA is available on the SSA website.
9. Is the CPI a cost-of-living index? ▸
• The CPI frequently is called a cost-of-living index, but it differs in important ways from a complete cost-of-living measure. We use a cost-of-living framework in making practical decisions about questions that arise in constructing the CPI. A cost-of-living index is a conceptual measurement goal, however, and not a straightforward alternative to the CPI. A cost-of-living index would measure changes over time in the amount that consumers need to spend to reach a certain utility level or standard of living. Both the CPI and a cost-of-living index would reflect changes in the prices of goods and services, such as food and clothing that are directly purchased in the marketplace; but a complete cost-of-living index would go beyond this role to also take into account changes in other governmental or environmental factors that affect consumers’ well-being. It is very difficult to determine the proper treatment of public goods, such as safety and education, and other broad concerns, such as health, water quality, and crime, that would constitute a complete cost-of-living framework. Since the CPI does not attempt to quantify all the factors that affect the cost-of-living, it is sometimes termed a conditional cost-of-living index. Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in buying or consumption patterns that consumers would make to adjust to relative price changes. The ability to substitute means that the increase in the cost to consumers of maintaining their level of well-being tends to be somewhat less than the increase in the cost of the mix of goods and services they previously purchased. Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; in other words, the prices within most item categories (for example, apples) are averaged with the use of a geometric mean formula. This improvement moves the CPI closer to a cost-of-living measure, because the geometric mean formula allows for a modest amount of consumer substitution as relative prices within item categories change. The Chained CPI (C-CPI-U) also allows for substitution across item categories, and is thought by some to be a closer approximation to a cost-of-living index. However, the expenditure data used to compute the final C-CPI-U isn’t available until 10-12 months after the reference month, so a preliminary estimate of the index is published and later revised. Additional information about the Chained CPI is available on the Chained Consumer Price Index webpage,
10. What goods and services does the CPI cover? ▸
• The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups ( food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services ). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls. In addition, the CPI includes taxes (such as sales and excise taxes) that are directly associated with the prices of specific goods and services. However, the CPI excludes taxes (such as income and Social Security taxes) not directly associated with the purchase of consumer goods and services. The CPI also does not include investment items, such as stocks, bonds, real estate, and life insurance because these items relate to savings, and not to day-to-day consumption expenses. For each of the item categories, using scientific statistical procedures, the Bureau has chosen samples of several hundred specific items within selected business establishments frequented by consumers to represent the thousands of varieties available in the marketplace. For example, in a given supermarket, the Bureau may choose a plastic bag of golden delicious apples, U.S. extra fancy grade, weighing 4.4 pounds, to represent the apples category. Additional information about published items and item classification structure is available in the CPI section of the BLS Handbook of Methods,
11. How and when are CPI prices collected and reviewed? ▸
• BLS data collectors visit (in person or on the web) or call thousands of retail stores, service establishments, rental units, and doctors’ offices, all over the United States to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. We record the prices of about 80,000 items each month, representing a scientifically selected sample of the prices paid by consumers for goods and services purchased. During each call or visit, the data collector collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a 64-ounce container has been replaced by a 59-ounce container) of the good or service since the last time prices were collected, a new item is selected or the quality change in the current item is recorded. Prices used to compute the CPI are collected during the entire month. CPI data is published monthly, with the index value representing an estimate of the price level for the month as a whole, rather than a specific date. Since certain prices, particularly gasoline, might move sharply within a month, it is useful to understand the timing of price collection. A month is divided into three pricing periods, each period corresponding to roughly the first ten days, second ten days, or third ten days of the month. When an item is initiated into the CPI sample, its pricing period is established, and it will be repriced during that same period until it exits the sample after four years. Data collectors have discretion within pricing periods, so they can collect quotes at any time during the period. So, it’s not necessarily true that data collection is spread perfectly evenly through the month; however, roughly equal amounts of data are collected in each pricing period. Rent prices are an exception to this, as prices in the rent sample are not divided by pricing periods, and specific rent quotes can be collected at any time during the month. Pricing information is then sent to our national office, where specialists who have detailed knowledge about the particular goods or services review the data. These specialists check the data for accuracy and consistency, and make any necessary corrections or adjustments. Adjustments can range from an adjustment for a change in the size or quantity of a packaged item, to more complex adjustments based upon statistical analysis of the value of an item’s features or quality. Thus, commodity specialists strive to prevent changes in the quality of items from affecting the CPI’s measurement of price change.
12. Are CPI prices shared with other BLS price programs? ▸
• In certain situations, yes. In an effort to increase efficiency and reduce overall respondent burden, the Consumer Price Index Program, the Producer Price Index Program, and the International Price Program may share resources to collect pricing information from respondents that are selected for inclusion in multiple surveys. In these cases, prices for the same product or service may be used by more than one price program; however, each program would determine appropriate weighting according to its own established methodology. All information shared across programs is used for statistical purposes only and is protected under the BLS confidentiality pledge,
13. Does the CPI collect prices from online outlets? ▸
• The outlets in the CPI sample are selected using data from the Consumer Expenditure Survey where respondents are asked where they made purchases. To the extent respondents of that survey report making purchases from online outlets, those outlets have a chance of being selected for the sample. As of 2017, about 8 percent of quotes in the CPI sample (excluding the rent sample) are from online outlets; this is close to the estimate of online sales from the U.S. Census Bureau’s quarterly retail sales survey. As expected, the percentage of quotes from online sources varies greatly depending on the item category.
14. How are taxes treated in the CPI? ▸
• Taxes that are directly associated with the purchase of specific goods and services (such as sales and excise taxes), as well as government user fees, are included in the CPI. For example, toll charges and parking fees are included in the transportation category, and entry fees to national parks are included as part of the admissions index. In addition, property taxes are indirectly reflected in the BLS method of measuring the cost of the flow of services provided by shelter, called owners’ equivalent rent, to the extent that these taxes influence rental values. Taxes not directly associated with specific purchases, such as income and Social Security taxes, are excluded, as are the government services paid for through those taxes.
15. Is the CPI the best measure of inflation? ▸
• Various indexes have been devised to measure different aspects of inflation. Inflation has been defined as a process of continuously rising prices or, equivalently, of a continuously falling value of money. The CPI measures inflation as experienced by consumers in their day-to-day living expenses; the Producer Price Index ( PPI ) measures inflation at earlier stages of the production process; the International Price Program ( IPP ) measures inflation for imports and exports; the Employment Cost Index ( ECI ) measures inflation in the labor market; and the Gross Domestic Product ( GDP ) Deflator measures inflation experienced by both consumers themselves as well as governments and other institutions providing goods and services to consumers. There are also specialized measures, such as measures of interest rates. The “best” measure of inflation depends on the intended use of the data. The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase at today’s prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period.
16. Which index is the “official CPI” reported in the media? ▸
• The broadest and most comprehensive CPI is called the All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, 1982-84=100. CPI data are reported on a not seasonally adjusted basis as well as a seasonally adjusted basis. Sometimes the index level itself will be reported, but it is also common to see 1-monthor 12-month percent changes reported. In addition to the all items index, BLS publishes thousands of other consumer price indexes, such as all items less food and energy, Some users of CPI data use this index because food and energy prices are relatively volatile, and they want to focus on what they perceive to be the “core” or “underlying” rate of inflation.
17. How do I read or interpret an index? ▸
• An index is a tool that simplifies the measurement of movements in a numerical series. Most CPI index series have a 1982-84=100 reference base. That is, BLS sets the average index level (representing the average price level) for the 36-month period covering the years 1982, 1983, and 1984 equal to 100; then measures changes in relation to that figure. An index of 110, for example, means there has been a 10-percent increase in price since the reference period; similarly, an index of 90 means there has been a10-percent decrease. Movements of the index from one date to another can be expressed as changes in index points (simply, the difference between index levels), but it is more useful to express the movements as percent changes. This is because index points are affected by the level of the index in relation to its reference period, while percent changes are not. In the table that follows, Item A increased by half as many index points as Item B between Year I and Year II. Yet, because of different starting indexes, both items had the same percent change; that is, prices advanced at the same rate. By contrast, Items B and C show the same change in index points, but the percent change is greater for Item C because of its lower starting index value.
Index change calculation

Item A Item B Item C
Year I 112.500 225.000 110.000
Year II 121.500 243.000 128.000
Change in index points 9.0 18.0 18.0
Percent change 9.0/112.500 x 100 = 8.0 18.0/225.000 x 100 = 8.0 18.0/110.000 x 100 = 16.4

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18. What index should I use for escalation? ▸
• The decision to employ an escalation mechanism, as well as the choice of the most suitable index, is up to the user. When the terms of an escalation contract are drafted, both legal and statistical questions can arise. While we cannot help in matters relating to legal questions, we can provide basic technical and statistical assistance to users who are developing indexing procedures. In general, for escalation, we strongly recommend using indexes that are not seasonally adjusted. We also recommend using national or regional indexes, due to the volatility of local indexes. Another consideration is whether to use a particular monthly index from one year to the next, such as December to December, or use annual averages. From a statistical perspective, each of these types of indexes has its advantages. A 12-month percent change from, say, December-to-December, is arguably a more recent estimate of price change than an annual average percent change. Said another way, the December-to-December percent change is the most recent 12-month percent change in a year, while the annual average percent change reflects the change in the average index for all 12 months of one year to the average index for all 12 months the next year. The December-to-December index percent change, however, tends to be more volatile than the percent change in the annual average index. Annual average indexes are based on 12 monthly data points which, when averaged, reduce volatility by smoothing out the highs and lows. When drafting a contract that uses an index series for escalation, it is helpful to be as specific as possible so that all parties will be clear about the terms. A reference to ‘CPI’ or even ‘CPI-U’ can be ambiguous. In order to be completely clear, a contract should specify all of the parameters needed to identify a unique series, such as ‘Consumer Price Index for All Urban Consumers (CPI-U), US City Average, All Items, 1982-84=100, not seasonally adjusted.’ Additional information on using CPI data for escalation is available in the How to Use the Consumer Price Index for Escalation factsheet,
19. When should I use seasonally adjusted data? ▸
• By using seasonally adjusted data, some users find it easier to see the underlying trend in short-term price changes. It is often difficult to tell from raw (unadjusted) statistics whether developments between any 2 months reflect changing economic conditions or only normal seasonal patterns. Therefore, many economic time series, including the CPI, are adjusted to remove the effect of seasonal influences—those which occur at the same time and in about the same magnitude every year. Among these influences are price movements resulting from changing weather conditions, production cycles, changeovers of models, and holidays. BLS annually re-estimates the factors that are used to seasonally adjust CPI data. Seasonally adjusted indexes that have been published earlier are subject to revision for up to 5 years after their original release. Therefore, unadjusted data are more appropriate for escalation purposes.
20. What area indexes are published and how often? ▸
• National (or U.S. City Average) indexes are published monthly for the CPI-U, CPI-W, and C-CPI-U. For the CPI-U, an extensive set of component indexes and sub-aggregates are published monthly along with the all items index. A similar, but slightly smaller set is published for the CPI-W. For the C-CPI-U, only national indexes are published, with a more limited set of components and aggregates published. However, the expenditure data used to compute the final C-CPI-U isn’t available until 10-12 months after the reference month, so a preliminary estimate of the index is published and later revised.
CPI-U and CPI-W data are also published for the following areas:

Area Publication cycle
Northeast Region Monthly
New England Division Monthly
Boston-Cambridge-Newton, MA-NH Bimonthly (Odd)
Middle Atlantic Division Monthly
New York-Newark-Jersey City, NY-NJ-PA Monthly
Midwest Region Monthly
East North Central Division Monthly
Chicago-Naperville-Elgin, IL-IN-WI Monthly
Detroit-Warren-Dearborn, MI Bimonthly (Even)
West North Central Division Monthly
Minneapolis-St. Paul-Bloomington, MN-WI Bimonthly (Odd)
St. Louis, MO-IL Bimonthly (Even)
South Region Monthly
South Atlantic Division Monthly
Atlanta-Sandy Springs-Roswell, GA Bimonthly (Even)
Baltimore-Columbia-Towson, MD Bimonthly (Even)
Miami-Fort Lauderdale-West Palm Beach, FL Bimonthly (Even)
Tampa-St. Petersburg-Clearwater, FL Bimonthly (Odd)
Washington-Arlington-Alexandria, DC-VA-MD-WV Bimonthly (Odd)
East South Central Division Monthly
West South Central Division Monthly
Dallas-Fort Worth-Arlington, TX Bimonthly (Odd)
Houston-The Woodlands-Sugar Land, TX Bimonthly (Even)
West Region Monthly
Mountain Division Monthly
Denver-Aurora-Lakewood, CO Bimonthly (Odd)
Phoenix-Mesa-Scottsdale, AZ Bimonthly (Even)
Pacific Division Monthly
Los Angeles-Long Beach-Anaheim, CA Monthly
Riverside-San Bernardino-Ontario, CA Bimonthly (Odd)
San Francisco-Oakland-Hayward, CA Bimonthly (Even)
Seattle-Tacoma-Bellevue, WA Bimonthly (Even)
Urban Hawaii Bimonthly (Odd)

The set of components and sub-aggregates published for regional and metropolitan indexes is more limited that at the U.S. city average level; these indexes are byproducts of the national CPI program. Each local index has a much smaller sample size than the national or regional indexes and is, therefore, subject to substantially more sampling and other measurement error. As a result, local-area indexes are more volatile than the national or regional indexes, and we urge users to consider adopting the national or regional CPIs for use in escalator clauses. Used with caution, local-area CPI data can illustrate and explain the impact of local economic conditions on consumers’ experience with price change. If there is no CPI for the area you are in, we can provide some guidance on a recommended area to use instead, but users must make the final decision.

21. Can indexes for individual areas be used to compare living costs among the areas? ▸
• No, an individual area index measures how much prices have changed over a specific period in that particular area; it does not show whether prices or living costs are higher or lower in that area relative to another. In general, the composition of the market basket and the relative prices of goods and services in the market basket during the expenditure base period vary substantially across areas.
22. What are some limitations of the CPI? ▸
• The CPI is subject to both limitations in application and limitations in measurement. Limitations in application One limitation is that the CPI may not be applicable to all population groups. For example, the CPI-U is designed to measure inflation for the U.S. urban population and thus may not accurately reflect the experience of people living in rural areas. The CPI does not produce official estimates for the rate of inflation experienced by subgroups of the population, such as the elderly or the poor. Note that we do produce an experimental index for the elderly population that is available upon request; however, because of the significant limitations of this experimental index, it should be interpreted with caution. Another limitation is that the CPI cannot be used to measure differences in price levels or living costs between one area and another as it measures only time-to-time changes in each area. A higher index for one area does not necessarily mean that prices are higher there than in another area with a lower index. Instead, it means that prices have risen faster in the area with the higher index calculated from the two areas’ common reference period. Additionally, the CPI is a conditional cost-of-living measure; it does not attempt to measure everything that affects living standards. Factors such as social and environmental changes and changes in income taxes are beyond the definitional scope of the index and are excluded. Limitations in measurement Limitations in measurement can be grouped into two basic types, sampling error and non-sampling error. Sampling error. Because the CPI measures price changes based on a sample of items, the published indexes differ somewhat from what the results would be if actual records of all retail purchases by everyone in the index population could be used to compile the index. These estimating or sampling errors are limitations on the accuracy of the index, not mistakes in calculating the index. The CPI program has developed measurements of sampling error, called variance estimates, which are updated and published annually at CPI Variance Estimates, The CPI sample design allocates the sample in a way that maximizes the accuracy of the index, given the funds available. Non-sampling error. These errors occur from a variety of sources and unlike sampling errors, they can cause persistent bias in measurements of the index. Non-sampling errors are caused by problems of price data collection, logistical lags in conducting surveys, difficulties in defining basic concepts and their operational implementation, and difficulties in handling the problems of quality change. Non-sampling errors can be far more hazardous to the accuracy of a price index than sampling errors so we expend considerable effort to minimize these errors. Highly trained personnel ensure the comparability of quality of items from period to period; collection procedures are extensively documented, and recurring audits are conducted. The CPI program has an ongoing research and evaluation program in order to identify and implement improvements in the index.
23. Will the CPI be updated or revised in the future? ▸
• Yes. The CPI will need revisions as long as there are significant changes in consumer buying habits or shifts in population distribution or demographics. By developing annual Consumer Expenditure Surveys, the Bureau has the flexibility to monitor changing buying habits in a timely and cost-efficient manner. In addition, the census conducted every 10 years by the U.S. Census Bureau provides information that enables us to reselect a new geographic sample that accurately reflects the current population distribution and other demographic factors. BLS is continually researching improved statistical methods, so even between major revisions, improvements are made to the CPI.
• Information on the CPI is available from our website and through email subscriptions to data products, and a variety of publications. Information specialists are also available in the national and regional offices to provide assistance via email or telephone. Internet. BLS provides free access to published CPI data via press releases, tables, and current and historical data from our database. Social media. BLS has a stat for that! Follow us on Twitter to see the latest statistics that can help you make informed decisions, whether you’re a worker, jobseeker, student, employer, investor, or policymaker. Subscriptions. The latest U.S. average and local Consumer Price Indexes can be delivered directly to a subscriber’s email address on the morning of their release. You can subscribe to our national news release or regional data products by using the BLS News Service feature. Publications. The Bureau produces several publications, such as the Monthly Labor Review (MLR) and Beyond the Numbers that you can search for articles related to the CPI. Recorded CPI data. Recorded summaries of national and local CPI data may be obtained by calling one of the following metropolitan area CPI hotlines. Recordings are approximately 3 minutes in length and are available 24hours a day, 7 days a week.
Recorded information

Metropolitan Area Phone Number
Anchorage 415-625-2270
Baltimore 410-962-4898
Boston 617-565-2327
Dallas 972-850-4800
Honolulu 415-625-2270
Houston 713-718-3753
Kansas City 816-285-7000
Los Angeles 415-625-2270
New York 646-264-3600
Phoenix-Mesa 415-625-2270
Pittsburgh 412-644-2900
Riverside 415-625-2270
San Diego 415-625-2270
San Francisco 415-625-2270
Seattle >415-625-2270
Washington DC 410-962-4898

Personal assistance. Additional information is available during normal working hours, Monday through Friday, by contacting the national office (Washington DC) or any of the regional offices listed below.

Contact information

Office Email Phone number
Atlanta [email protected] 404-893-4222
Boston [email protected] 617-565-2327
Chicago [email protected] 312-353-1880
Dallas [email protected] 972-850-4800
Kansas City [email protected] 816-285-7000
New York [email protected] 646-264-3600
San Francisco [email protected] 415-625-2270
Washington DC (national office) [email protected] 202-691-7000

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