Planned change in the Consumer Price Index formula

Article Abstract:

A new formula, the geometric mean estimator, will be used to calculate basic components of both consumer price indexes, beginning with data for Jan 1999. Overlap series using the current method of calculation will be published for the first half of 1999 and will be available for subsequent months on request. The new formula will be used for categories covering about 61% of consumer spending in the Consumer Price Index for All Urban Consumers (CPI-U). Use of the new formula is expected to lower the CPI's annual rate of increase by about 0.2 percentage point per year.

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Treatment of mandated pollution control measures in the CPI

Article Abstract:

Price changes associated with mandated pollution control measures will be treated as increases in the Consumer Price Indexes (CPI) beginning with the January 1999 index. Previously these were treated as quality improvements. The changes mean that air quality will be treated consistently with changes affecting the quality of other public goods. Economic rationale for the change is discussed, along with problems associated with non-market factors, differences between consumer-oriented and firm-oriented price indexes, and the estimated impact on the CPI.

Economic aspects, Automobiles, Pollution control equipment, Automotive pollution control equipment

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Planned change in the Consumer Price Index formula

Article Abstract:

The geometric mean estimator will be used to calculate basic components of the Consumer Price Indexes beginning with January 1999 data. The new formula will be used to calculate categories making up about 61% of the consumer spending reflected in the Consumer Price Index for All Urban Consumers (CPI-U). The change is expected to result in a 0.2% per year reduction in the CPI's annual rate of increase. Overlap series using the previous method of calculation will also be published for the first six months of 1999.

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