WHAT IS CPI, HOW IS IT FIGURED, AND WHY THE HECK DO I CARE?

Also known as CPI, the Consumer Price Index is one of the most important benchmarks the financial world watches. It is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. Hence it is often referred to as the cost-of-living index. The U.S. Department of Labor publishes the Consumer Price Index every month. The main page contains an overview, frequently asked questions, news releases, and contact information. Current data includes both All Urban Consumers (CPI-U) and Urban Wage Earners and Clerical Workers (CPI-W).

The U.S. Department of labor has developed an imaginary shopping cart. They have tried to determine how the average person will spend money for a one month period. All of these items are listed in the link below, and the chart shows how much weight is given to each item relative to "100". How does your spending stack up with the "average"? It is the CPI-W that they use to work out our COLA.

It is the cumulative monthly average of these CPI reports that determines whether our U.S. Social Security checks increase.

Click to see the 6-page list, if you have the stomach! These pages will show exactly which consumer items are considered in figuring the CPI-W, and thus our COLA. (.pdf file, requires free Acrobat Reader)

and: Does the CPI reflect what Seniors must actually spend?

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