How Consumer Price Index Data Impacts You


Every month, Debi Bertram, an economic assistant in our Philadelphia region, checks the price of milk at a local grocery store. She also goes to several stores to check the prices of items such as toothpaste, sports equipment and appliances. You may not know Debi – or any of the men and women who collect data for the Bureau of Labor Statistics – but their findings have a real impact on your life.

Among other things, they’re used for making changes in the federal income tax structure and providing cost-of-living wage adjustments for millions of American workers. Additionally, the president, Congress and the Federal Reserve Board use trends in that data to inform fiscal and monetary policies.

How does it work? BLS data collectors visit or call thousands of locations across the country, from grocery stores to doctors’ offices, to get the prices of about 80,000 different items every month. That data helps BLS compile the Consumer Price Index, which measures the average change over time in prices consumers pay for a market basket of goods and services. It is the key measure of consumer inflation in the U.S. economy.

 

Just got paid

It's very possible the CPI helps determine how big your paycheck is. Many employers use the CPI, formally or informally, to decide how much of a cost-of-living raise to give employees. Additionally, many states index their minimum wage by the overall CPI increase. The CPI helps determine how much comes out of your paycheck too, as the IRS uses it to adjust tax bracket thresholds. And many states use CPI data to calculate and adjust worker's compensation payments.

The check’s in the mail

Mailing a birthday card? The CPI helps determine how much it costs. The Postal Regulatory Commission uses CPI data in the decision about price increases for stamps and postal fees.              

Back to school

The U.S. Department of Agriculture’s Food and Nutrition Services uses CPI data to determine the annual payments and rate adjustments for the National School Lunch and School Breakfast Programs. The CPI is also consulted to adjust thresholds for eligibility to these programs.

Got to pay the rent

The CPI may even affect where you live. Many landlords tie rent changes to CPI increases; in some cities rent increases for some properties cannot exceed the increase in the CPI. The CPI may also come into play if you want to rent government facilities; the CPI for rent is used to adjust fees for using federal facilities.

You can find out more about how the CPI affects your economic life here.

Steve Reed is an economist in the BLS Consumer Price Index program. 


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