Talk:Consumer price index

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RPI and CPI[edit]

Actually, RPI and CPI are two different things.

It would seem that RPI and CPI have very different definitions depending on what part of the world you're in. this page should really be divided into geographical variations.

In the UK, RPI and CPI are definitely not the same thing. The Government uses CPI for inflation targetting, and the RPI for things like setting the interest rate on student loans. Does anyone that knows the details of the two systems feel like prising the two apart again?

- Splash 19:52, Jun 2, 2005 (UTC)
Seconded - for example, shows a figure of 2.2% for CPI and 3% for RPI, so they are evidently not the same thing here in the UK. Matthew 09:17, 13 June 2006 (UTC)

Indeed- while the CPI is now the preferred system by the UK government, RPI has not ceased to exist- so this page should be split.While both systems are created using a basket of goods, the good vary greatly - for example the CPI does not include costs such as mortgage repayments/council tax - however the RPI does. The RPI is therefore favoured by trade unions as they believe it shows the true cost of living(a higher cost), and believe a higher value ( than the government preferred CPI) will enable them to negotiate better pay terms for their members. —Preceding unsigned comment added by (talk) 14:13, 3 June 2008 (UTC)

As I understand it there are two chief differences between the CPI and RPI as understood by the UK Government and EUROSTAT. The CPI includes housing costs - not just mortgage interest but items such as insurance, television licence fees and utilities costs - while the RPI does not (this does not of course mean that the housing element of an income adjusted by the CPI remains unadjusted, simply that the basket is differently constructed). The other (contrary to this article) is that the CPI is calculated by deriving a geometric mean of the items, while the RPI uses an arithmetic mean. The geometric mean of a group of values is always lower than the arithmetic mean unless all the values are the same (in recent years the CPI has risen each year by around 1% to 1.5% less than the RPI). The thinking behind this I have not seen properly explained. Deipnosophista (talk) 15:36, 24 December 2010 (UTC)

if i am an exporter[edit]

i have a very simple question, if i am an exporter, and i realise that the CPI is growign year over year, what does that mean..taking other vairables contant.. does this form a positive situation to penetrate the market, or it is a negative indicator??

merge with Consumer Price Index[edit]

I think that this should obviously be combined with Consumer Price Index. I think that Wikipedia should not be case sensitive.

This undated request seems to have been accomplished by a redirect with initial entry 16 August 2002. DavidMCEddy (talk) 16:57, 11 April 2013 (UTC)

NOTE: two contradictions to the text[edit]

Daily Telegraph 04/12/06: Contradiction to header section: "A spokesman for the Office for National Statistics said: "The CPI and RPI are specifically not intended [NOTE] to measure what people often refer to as 'the cost of living'." Contradiction to UK section: "Although the Bank of England has frequently said that the CPI is an acceptable economic measure for the purpose of setting interest rates, it does not include many major costs for households — most notably [NOTE] council tax and mortgage payments, which were an important part of RPI." Felicitygraham 14:43, 4 December 2006 (UTC)

Any chance of seeing the makeup of an actual market basket of goods?[edit]

Is it published anywhere online? One would think any article on the CPI would show what is included in it. Is this index not published anywhere? Is it a government secret? —Preceding unsigned comment added by (talk) 06:28, 1 January 2009 (UTC)

External links[edit]

Please don't scramble the links again. "External" means that they're external from the calculating and publishing source. Of the five ecternal links 4 are about the hedonics and 1 about substitution of goods. Understand?--Jerryseinfeld 01:34, 5 Jan 2005 (UTC)

I added hedonics to the "See also" and removed the link labeled hedonics by the bureau of labor statistics (clothes driers) since the same article is a reference for the "Hedonics" article. What do you think about moving other hedonics related articles there?


Ireland, too:

energy and food prices[edit]

    Why do they take out energy and food prices?

"They" presumably means the Bureau of Labor Statistics. Energy and food prices are removed to calculate 'core' inflation (the BLS refers to that measure as 'all items less food and energy'). Core inflation has several meanings, but it is commonly meant to be the underlying trend in price inflation. Other calculations are possible, and Comparing Measures of Core Inflation provides an overview of several common definitions.

    Does this make people stop using them?

This question is argumentative and uneducated.

As is this answer. — Preceding unsigned comment added by (talk) 20:06, 21 August 2013 (UTC)
    What would be the real inflation rate, if you add back everything they take out?

That is called the 'headline' or 'all-items' definition. Both the headline rate and the core rate are available from the BLS website.

    What is the value of the CPI when you are going broke paying for energy and food?

The headline rate is used for indexing labor contracts and social security payments and is commonly reported in the press. Like any summary statistic, it does not address the circumstances of any specific individual.

broken link?[edit]

The "U.S. Consumer Price Index webpage" link under External Links is not working. I've not tried all links, since I'm primarily interested in the CPI at the moment. 16:57, 28 March 2006 (UTC)Brian Pearson

Worked fine for me. Monkeyman.pngMonkeyman(talk) 19:04, 28 March 2006 (UTC)

Calculating the CPI[edit]

I've reverted "Calculating the CPI" to a version of the section from the history before it was spammed and the content removed (replaced with words "bold text"). Check through, those in the know? Thanks -- Chris Wood 20:16, 2 April 2006 (UTC)

______ I'm new to the wikipedia thing and discussion, so please if I am doing something wrong by typing this let me know. The article did not make it very clear what "chained" meant. I am not an economist. Could someone with expertise explain it?

I also don't understand the explanation of "chained." And what the heck is a "Tornqvist formula"?

I created a section on "Consumer Price Indices in the United States" with subsections "History" and "Chained CPI". The intro to this section explains "chained" with references.
Also, the previous "Chained CPI" section mentions "Critics[who?] of the U.S. government’s current method of setting inflationary rates", asking "[who?]" these critics might be. A critic is mentioned, so I deleted this sentence. DavidMCEddy (talk) 03:32, 12 April 2013 (UTC)

Urban index[edit]

What evidence do we have that the CPI is only an urban index? My understanding is that is a wider measure than that. In Australia, rural prices and suburban prices are measured as well. Capitalistroadster 07:01, 3 June 2006 (UTC)

I would like to understand what factors and weighs make up the index. For example, transportation: cost of vehicle, cost of gas, cost of insurance, cost of maintenance--- and the extent the ratio has changed or stayed the same? most of the people I know express the view that the CPI doesn't reflect their personal experience with inflation, such as the rising cost of medical treatment and medical insurance. ----Don Becker, June 15, 2006

The request seconded: why the intro speaks only of "urban households"? Of course in a subsistence economy the distinction of rural/urban is drastic, but in modern societies that should be levelled out, in te4rms of consumer goods. `'mikka (t) 17:49, 23 August 2006 (UTC)

The intro was changed to refer to consumers instead of urban households". The article refered to urban households because the U.S. CPI only measures prices in urban areas with rural areas left out. I am not sure if other countries do this, but since this is a general article that is not speicific to the U.S., I removed it. I will try to create a U.S. specific article when I have time. ---Jhamilton2087, August 25, 2006

Horrendously POV[edit]

The CPI is revised on a continuing basis to compensate for the introduction of new products and outlets. [1] An example would be that if the price of beef rises, consumers would switch to chicken. This distorts the index because it allows for the continual degration of products that are rising in price in the index until the consumer it represents is living on millet and powdered milk.

Nowhere is the assertion made that chicken and beef are perfect substitutes --- but they are obvious partial ones. In substitution of beef-for-chicken-for-millet, there is no "degration" (degradation?) of products: only a re-evaluation of information on scarcity and relative value and a consequent reconsideration of choices. In developed countries, more consumers are eating more chicken and beef than ever before; indeed, some of them might benefit in terms of cardiovascular health if they were to begin substituting millet (high in protein, fiber and vitamins) and low-fat powdered milk for some of the high-fat fleshmeat they consume!--Jpbrenna 21:55, 14 August 2006 (UTC)

For the American (and maybe others, I don't know) CPI the first part of the quote is correct while the second part is not. New products (goods and services, to be more correct) and outlets do get added to the index on a continual basis. When the older goods and services are no longer offered new ones are added in their place and through continual replacement of what is used in the index. A switch from beef to chicken would be reflected in the index when new goods and services are added.

The American CPI also takes into account inflation when consumers start "living on millet and powdered milk." When goods and services are replaced "quality adjustments" to the items and their prices.

I was of the opinion that substituting chicken for beef was done deliberately to make the CPI lower, so I initially did not agree with the change. In studying productivity. I did a lot of research to identify reasons why the hours of work to buy a 3 pound chicken fell from 2 hrs 40 minues in 1900 to about 18 minutes by 1998. Some of the reasons were agricultural mechanization, refrigeration, better transportation and mass distribution, but these happened decades ago and the price of chicken continued to fall. One of the important reasons was the green revolution which increased crop yields by a factor of between 3 (soybeans) and 5 (most grains) from the early 1940's until the mid 2000s and another was the advances in poultry management. As a consequence people started to eat a lot more chicken. If you do not adjust for the shift in consumer preference you do not pick up on the ture savings.Phmoreno (talk) 00:58, 29 September 2010 (UTC)
There is now a section on "Consumer Price Indices in the United States" that briefly describes weighting including quoting from BEA web sites about the difference between CPI-U, CPI-W and C-CPI-U that attempts to clarify this. DavidMCEddy (talk) 04:01, 12 April 2013 (UTC)

Countering systemic bias[edit]

The introductory paragraphs to this article are not very friendly and are, I presume, written from an American perspective. For instance, the introduction speaks of 'the CPI' when there are slightly different measures around the world, and Core CPI, whatever that may be, reads as though it's specific to one part of the world. Hence I think this article could do with a cleanup or a

tag being put on until it is cleaned. Matthew 12:56, 22 February 2007 (UTC)

Massive recent addition[edit]

I've tried to clean up the two new sections added on 'Weighting' and 'Quality adjustment'. I'm afraid the QA section was just a mess and I could not make heads or tails out of the intent nor could I verify any of the content. I've left in the weighting section since it could be made legible, but I would greatly appriciate specific references to the numerous 'conclusions' made within the text. At the moment, both sections felt more like a term paper than a encyclopedia entry. It would be great to clean them up and get the content in, but let's get it sourced specifically first. Kuru talk 02:01, 8 August 2007 (UTC)

Why does RPI redirect to the CPI article?[edit]

According to everything I have read including this article, the retail price index and the consumer price index are completley different things, so why does RPI redirect here? —Preceding unsigned comment added by Comrinec (talkcontribs) 17:50, 25 May 2008 (UTC)

I totally agree here: They are not the same and the re-direct needs to be removed. —Preceding unsigned comment added by (talk) 12:37, 18 July 2008 (UTC)

I have reverted the redirect so that Retail price index is now a distinct article. I also added a cite from the UK government that should explain the difference. It does need wikifying, citing and cleanup. -84user (talk) 15:14, 22 October 2008 (UTC)

Headline and core CPI[edit]

What are "headline CPI rate" and "core CPI"?. --Mac (talk) 12:47, 30 May 2008 (UTC)

Core CPI removes the wrong items[edit]

The so called "core" CIP that removes food and energy is totally misleading. Food and energy prices may be volatile but 1) food is one of the most basic human needs and 2) the price of food is largely determined by the price of energy at today's oil prices and 3) we no longer have the ability through technology to bring down the cost of these two components. The green revolution increased crop yields by a remarkably constant amount from 1944-2000, meaning the percent increase has decreased over time (initially something like 5%, now something like 1%, headed to 0%). The other issue is rising real oil prices due to depletion and much higher production costs.Phmoreno (talk) 01:14, 29 September 2010 (UTC)

What do you mean by "3) we no longer have the ability through technology to bring down the cost of these two components?" We have ongoing automation of refineries, process improvements, fracking, and discoveries of new sources of oil, we have a possible change in the source of energy from oil to other alternatives, and we have ongoing advancements in the production of food that is continuing to reduce the production costs per unit of yield. America may soon actually become a net oil exporter, for example. There is no way that that event will occur without affecting the price of oil world-wide. Development is proceeding with aquaponic techniques that marry hydroponics and aquafarming to increase crop yields while drastically reducing external inputs such as feed and water, while also drastically reducing negative outputs, such as polluted waste-water. As the technique is adopted on a larger scale, a variety of fish and vegetables will be available at lower prices. The technique also lends itself to producing fish and vegetables anywhere, meaning that fish and produce can be sourced nearer to markets, reducing the transportation cost component in these products. That said, it is arguable that food and energy costs being removed from "core" CPI is a flawed concept, or purely to produce a comfortingly small number. -- (talk) 20:27, 21 August 2013 (UTC)

Surprised to see the tax percentage as 43%. What effect does not counting taxes as a cost of living have? If my taxes go up(or down) you would think that everything would have to be reweighted. Also are there weights for different income groups - I bought my house many years ago - it is all paid for - now paying taxes on the house is proportionally worse than the motrgage every was. (talk) 13:59, 6 January 2011 (UTC)

US alterations of CPI calculation under-represents true inflation rate[edit]

It has been argued that changes in 1980 and 1990 of how CPI is calculated grossly underestimates the inflation rate and effectively hides the real rate. The benefit to an endebted government would be to reduce its debt obligation to various programs (eg, Social Security) and lenders, where debt is tied to inflation based, potentiall, on CPI, in real value terms of the debt. —Preceding unsigned comment added by (talk) 07:58, 22 April 2011 (UTC)

This was added and deleted. I re-added it, but with a better cite - Posner's "What Caused the Financial Crisis". --John Nagle (talk) 04:26, 4 November 2011 (UTC)

Consumer price index question?[edit]

Since 2000 or maybe from beginning day of the trade, the consumer price index is always increasing? For example, our house was purchased in 2000 in 70,000RMB, but today it would be valued at 200,000RMB. So I wonder what's the significance of GDP per capita growth? While in consumer electronics products, the price is always falling down. Can anyone analyze this? And give me an economic living way or even investment scheme. (talk) 07:29, 16 July 2011 (UTC)


Re [1] - these are actually fairly standard and legitimate (hence, not POV), though I would describe these issues more as "difficulties" rather than "criticisms", and yes, the text does need sources.Volunteer Marek 18:26, 14 March 2013 (UTC)

Real item price[edit] added the following:

Real item price($) = (base year price)*(Base year CPI/Current year CPI)

The sentiment may be appropriate that something like this could help communicate to people with a math phobia. However, I perceive two problems with this:

  1. I don't think there is any such thing as a "real" price.
  2. The formula seems to have the ratio upside down, because the units don't match (dimensional analysis).

Accordingly, I'm changing this as follows:

Current year price ($) = (base year price) * (Current year CPI) / (Base year CPI).

DavidMCEddy (talk) 22:20, 16 April 2013 (UTC)

I’m trying to find a the price of a 1971 Chicago Schwinn Bicycle Massey4565 (talk) 11:23, 23 April 2018 (UTC)

Dr. Diewert's comment on this article[edit]

Dr. Diewert has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This article looks OK to me.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Diewert has published scholarly research which seems to be relevant to this Wikipedia article:

  • Reference : , & Diewert, Erwin, 2014. "An Empirical Illustration of Index Construction using Israeli Data on Vegetables," Economics working papers erwin_diewert-2014-11, Vancouver School of Economics, revised 11 Mar 2014.

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