CPI-W reflect what Seniors must actually spend?
What is included in
the Consumer Price Index market basket?
The Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W) is limited to the
spending patterns of younger working consumers and
represents less than one-third of the total U.S.
population. Although used to determine Cost-of-Living
Adjustments (COLAs), it specifically EXCLUDES the spending
experience of anyone whose primary source of income is
from retirement pensions. Currently the CPI-W market
basket contains such things as rent, some medical costs,
food, gas and oil among other items. It also includes high
tech consumer items such as computers, big screen
televisions, cell phones, DVD players that tend to rapidly
decrease in price as the technology improves. Seniors
however, do not purchase high tech items as often as
younger working consumers. Instead, older Americans spend
a greater share of their incomes on items that are more
rapidly increasing in price-like prescription drugs and
health care. Thus senior advocates say the CPI-W tends to
understate senior costs resulting in COLAs that are not
keeping pace with senior costs.
WHAT IS CPI, HOW IS IT FIGURED, AND WHY THE HECK DO I
Click to see the 6-page list of items included in the
CPI index that affects our COLA
Security Tips Page