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Its Uses
and Limitations
UNITED STATES DEPARTMENT OF LABOR
Martin P. Durkin, Secretary
BUREAU OF LABOR STATISTICS
Ewan Clague, Commissioner
T H E C O N SU M E R
PRICE IN D E X
A Layman’s Guide
Bulletin N o. 1140
UNITED STATES DEPARTMENT OF LABOR
Martin P. Durkin,
Secretary
BUREAU OF LABOR STATISTICS
Ewan Cl ague, Commissioner
For sale by the Superintendent of Documents, U. S. Government Printing Office
Washington 25, D. C. - Price 20 cents
Letter o f Transmittal
U nited States D epartment of L abor,
B ureau of L abor Statistics,
Washington 25, D . C., M ay 15, 1953.
The Secretary of L abor :
I have the honor to transmit herewith a bulletin
on the Consumer Price Index. The volume of tech
nical information concerning this important statistical
series is as impressive as it is complete, but a real
need—until now unfilled—has been felt for a popular
description of the content, compilation, and uses of
the index. The increased use of price change data
in collective bargaining and in wage agreements has
made such a document even more necessary. Very
appropriately it is subtitled: A Layman’s Guide.
The text, written in language as nontechnical as is
consistent with accurate description, was prepared by
Mary S. Bedell of the Bureau’s Office of Publications.
E wan Clague , Commissioner.
Hon. M artin P. D urkin ,
Secretary of Labor.
in
Contents
I. What is the Consumer Price Index?............................
II. How is the Consumer Price Index compiled?..............
Selecting the cities....................................................
Determining the market basket...............................
Selecting items to be priced.....................................
Collecting prices for the index.................................
General procedure.................................................
Pricing specific commodities.................................
Food...................................................................
Housing.............................................................
Other goods and services... . ...........................
Calculating the index...............................................
Some problems in measuring price changes.............
Keeping the items in the index constant.............
Basic changes in quality or size of unit priced.
Introduction or deletion of items.....................
Weight changes.................................................
Price collection problems......................................
Other problems.....................................................
III. The need for periodic revision.....................................
IV. Uses and limitations....................................................
Appendixes
A. Cities in which prices are collected for the Consumer
Price Index, by months in which they are priced...
B. Items priced for the Consumer Price Index, and their
1952 relative importance..........................................
C. Basis of the Consumer Price Index before and after the
1950 adjustment and after the 1953 revision..........
D. Consumer Price Index, United States: All items, annual
averages, 1913-52......................................................
E. Selected bibliography....................................................
v
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The Consumer Price Index
I. W h at
Is The
Consumer
Price
Index?
First, let us look at the Consumer Price Index simply as a one
decimal number as shown in the following table.
Consumer Trice Index— United States Average, by Groups
of Commodities, January 1953
[1947-49=100]
All items...............................................................
113.9
Food.......................................................................
Housing................................................................
Apparel.................................................................
Transportation....................................................
Medical care........................................................
Personal care........................................................
Reading and recreation.....................................
Other goods and services..................................
113.1
116.4
104.6
129.3
119.4
112.4
107.8
115.9
1
Beyond the bare facts in the table, what do these figures show?
By definition,
The Consumer Price Index is a measure of the average change in prices of
goods and services customarily purchased by families of wage earners
and clerical workers living in cities of the United States.
Thus, of all the factors that enter into changes in the cost of
living, this index measures only one: price. Specifically, the
index figure for a given date shows the percent change in the
average cost of a list of goods and services, at prevailing prices,
to that date from the average for the years 1947, 1948, and 1949—
the base period of the index, which is always equal to 100.0.
The index number of 113.9 for January 1953, for example, means
that the cost of the goods and services was then 113-9 percent of
(or 13-9 percent above) their average cost in 1947-49. The base
period of an index number is selected to provide a uniform refer
ence point, the use of which makes comparisons between dates
an easy matter.
The percent change measures only the difference, between one
time and another, in average prices for the same quantities of
goods or services of the same qualities, priced in the same stores
or service establishments. ‘‘Same’’ is the key word here: because
the index is a measure of change in price, and price alone, the
effects of other changes must not be permitted to creep into the
measure. Variations in the quantity or quality of items priced
would produce changes in the index apart from any real change
in price. So would variations in stores where prices are obtained
(e. g., a comparison of prices obtained in January only from chain
food stores with prices obtained in February only from inde
pendents). The prices themselves are generally those on the
price tags of up-to-date merchandise in good condition, available
in the usual assortments (size, color, etc.), and regularly sold in
retail stores where wage and salary workers buy.
The 300 different goods and services priced for the index are
representative of a “ market basket’’ of all the goods and services
that made up the pattern of living of city workers’ families in
1952. The market basket is based on detailed information on
the kinds, qualities, and amounts of goods and services bought
by city families, and how much they spent for them. The infor
2
mation covered purchases by families of two or more persons,
whose principal earner got most of his income from employment
in a skilled, semiskilled, or unskilled manual or service occupa
tion (other than domestic service), or in a clerical or sales occu
pation. (Families who had incomes after taxes of $10,000 or more
were not included.) In 1952 these “ index” families averaged
3.3 persons, and their average income after taxes was estimated
at $4,160. They represent nearly two-thirds of all city families,
and nearly 40 percent of all families.
Prices are obtained in 46 cities so selected that their populations
are representative of the entire population of the 3,000 cities in
the United States. Prices in all 46 cities are then combined into
the national index. Separate indexes are calculated for the 20
largest of the 46 cities—monthly for the 5 largest, and quarterly
for the 15 others.
256697— 58------ 2
3
II. How
Is The
Consumer
Price
Index
Compiled?
The methods of compiling the index are described step by step
in this section. To simplify presentation, problems arising at
various points are discussed at the end of the section (p. 11).
Selecting the Cities
The first step in making the index was the selection of cities of
the United States where prices were to be collected. The 46
cities were selected to be representative of all kinds of cities,
taking into account city characteristics which affect the way in
which families spend their money (size, climate, density of popu
lation, and level of income in the community). Therefore, the
list (appendix A) includes cities of all sizes; hot, mild, and cold
cities; those with high, medium, and low income levels; and,
within each of these groups, cities with thick, medium, and thin
population density.
Determining the Market Basket
The next problem was to find out how wage and salaried
workers’ families in these cities spent their money—what went
into their market basket. The Bureau conducted a nationwide
4
survey of the 1950 expenditures of city consumers, selected, city
by city, to be representative of all city consumers.
The information thus obtained from about 8,000 wage earners’
and clerical workers’ families was analyzed and averaged to
determine: (1) the kinds of goods and services bought; (2) the
quantities bought and amount spent for each article; and (3) the
quality of each article bought. These averages were then ad
justed for changes in prices and buying habits that occurred
between 1950 and 1952.
The market basket is based on the 1952 figures and contains the
following broad classes of goods and services:
F ood
H o u sin g
A pparel
T ransp ortation
M ed ical care
P ersonal care
R ead in g and recreation
O th er g o o d s and services
Each of these categories, of course, is composed of several smaller
groups. Food, for example, consists of:
C ereals and bak ery produ cts
M ea ts, p o u ltry , and fish
D a iry produ cts
F ru its and vegetab les
O ther fo o d b o u g h t to be prepared at h om e
F o o d a w a y from h om e
Each smaller group of things in the market basket, in turn, is
composed of specific items, ranging from matches to houses.
Auto maintenance and repair, for example, includes such diverse
items as inner tubes and tires, grease jobs, gasoline, drivers’
licenses, and insurance against public liability and property
damage.
Not all items are equally important in family spending, and so
each item and group of items in the market basket also has a
dollar-and-cents tag to signify its importance.
Selecting Items To Be Priced
It would be both unnecessary and impossible to price all items
in the market basket, so the Bureau selected a representative list
of about 300 items (appendix B), and these are priced regularly.
They were chosen because of their importance in family buying,
5
and because, in combination, their price movements represent
those of all goods and services. Those selected for pricing fall
into three categories:
(a) Items most important in fam ily spending—rent, electricity,
and bread, for example. All of these are priced.
(b) Items whose price movements represent those of related item s .
Items whose prices moved in about the same way were grouped
together after study of prices for hundreds of items in the market
basket, and one or more items were chosen to represent each such
group. Round steak prices, for example, rise and fall at about the
same time and at about the same rate as do prices of sirloin and
porterhouse steaks; so only round steak is priced, and the changes
in price for sirloin and porterhouse steaks are estimated from
price changes for round steak.
(c) Items which are relatively unimportant but whose price cannot
be estimated from prices of other items. Postage rates, for example
have a distinctive price movement, and no other item can be
used to represent them in the index.
The quality of each item selected for pricing was then defined
in a “ specification” which describes the quality typically sold
within the range of prices most commonly reported by families.
These specifications permit some range of quality, such as minor
differences in construction, fabric, and style. For example, in
1950 most men paid $2.95 to $3-95 for a business shirt and the
following specification describes shirts which were usually sold
within that range of prices :
S h irt, b u siness: c o tto n b ro a d clo th , w h ite ; com bed yarn; thread cou n t,
136 x 60 or 128 x 68; m anu factu rer’s n a tio n a lly ad vertised brand; fused
or sim ila rly con stru cted co llar, attach ed ; barrel cuffs; residual sh rin kage
1 percent or less; fu ll cu t, clean w ork m an sh ip ; 31 to 32 yards per dozen
based o n 36-in ch fabric; 14 to 17 in ch neck b an d .
Collecting Prices for the Index
General Procedure
Most items are priced by Bureau agents who personally visit
stores, barber and beauty shops, and other places where workers
in the 46 index cities buy. Rents are largely collected by mail,
as are prices for items whose quality can be described easily and
exactly (e. g., fuel oil). Several items are most economically or
6
efficiently priced through central sources: rates for electricity,
for example, are obtained from the Federal Power Commission.
The Bureau of Labor Statistics’ pricing agents are intensively
trained for their jobs, and, in collecting prices for the index, they
usually consult the buyer or department head in the store. The
agents personally examine merchandise to make sure it meets
detailed specifications, and then record the prices on printed
forms.
Prices are obtained in chain and independent, department and
specialty, and downtown, neighborhood, and surburban stores
which are representative of those in which workers’ families buy.
Pricing Specific Commodities
The frequency of price collection and the number of cities
priced each month vary for individual goods and services. Spe
cifically, pricing procedures for food, housing, and other goods
and services are:
(1) Food. The index includes prices for about 90 foods con
sumed at home and for complete luncheons in restaurants,
collected from hundreds of independent and chain food stores
and catering establishments. Foods for home consumption are
priced each month in all 46 cities—on the first 3 days of the week
in which the fifteenth of the month falls. Once every 3 months
the Bureau’s agents also get prices from one week’s luncheon
menus in different kinds of eating places in all cities (monthly in
the five largest cities).
(2) Housing. Rents and the expenses of purchasing, maintain
ing, and operating a home are included in the index.
Rents are obtained each month in all 46 cities for dwellings
selected (and periodically checked) to be representative of those
in all sections of the city. All tenants in the “ sample”—about
32,000—are visited initially by BLS agents, who arrange for
future reports by mail and who return after several years to renew
the- arrangement and verify the accuracy of the mail reports.
Each month some of the tenants in each city report how much
rent they pay and what space, facilities, and services the landlord
furnishes.
Home ownership expenses priced by BLS agents include
maintenance and repair jobs, such as painting, roofing, and re
7
placing water heaters and sink faucets. Prices are obtained from
contractors who do this kind of work; materials used by homeowners to do such work themselves are priced in stores. Sales
prices of houses are gathered from records of local sales transac
tions. Prices for other homeowner costs—such as insurance,
taxes, and interest—come from the records of State or local
agencies. Maintenance and repair items are priced in each city
quarterly, other items annually or biennially.
Fuel prices are collected by mail each month in all cities.
Expenses of household operation, and housefurnishings and equip
ment are priced in the same way as “ other goods and services,”
discussed below.
(3) Other goods and services. Apparel, transportation, medical
care, personal care, reading and recreation, and other goods and
services are priced in about 4,000 stores and service establishments.
Bureau agents personally price almost all of these items. Prices
are obtained each month in the five largest cities and three or
four times a year in the others (see schedule in appendix A). A
limited number of important items, such as local transportation,
is priced monthly in all cities.
Calculating the Index
Each time prices are collected in a city, they are compared with
prices for the preceding period, and the percentage price change
for each item is computed. This computation takes into account
the importance of different kinds of stores: in cities where people
buy more in independent than in chain stores; for example, in
dependent store prices have more importance in the index.
At this point, price changes are combined with the expenditure
information described earlier. As indicated, initially each item
in the market basket has a dollar-and-cents value—or “ expendi
ture weight”—which represents its importance in the spending
of city wage earners’ and clerical workers’ families. Each of the
300 items actually priced has a weight equal to the total weight
of all the items it represents in the index. For example, white
bread represents all bread and plain rolls in the index; and ex
penditures for all of those “ bread products” add up to the weight
carried by white bread. Similarly, the weights for all priced
8
food items combined are about 30 percent of the total—the share
of family spending that goes to food; and the weights for all
priced items add up to the amount spent by families for the
hundreds of items in the market basket.
Here is an illustration of the way in which these figures are
combined with those on price changes: if the expenditure weight
for pork chops were $15 in September, a 3-percent increase in
pork chop prices for October would add 45 cents to expenditures
for pork chops, and the October expenditure weight would be
$15.45* Similar calculations are made for all items in each group
such as food, and the new expenditure weights are added to get
the new group total. The following example shows how this
is done for items of pork:
Item
P ork c h o p s............................
H a m s........................................
B a c o n ........................................
Septem ber P ercent
exp en d i
price
ture
w e ig h t ch an ge
$15
8
10
T o ta l..................
+ 3
Jr l
+ 2
33
A m o u n t added to
w e ig h t b y price
ch an ge
$ 0.45 C$1 5 x . 03)
.0 8 ( 8 X .0 1 )
.2 0 ( 10 X .0 2 )
.7 3
9
O ctob er
exp end itu re
w e ig h t after
price change
$ 1 5 .4 5
8 .0 8
1 0 .2 0
3 3 .7 3
How the Consumer Price Index Is Figured
[Note: All figures are hypothetical]
Item
If th e Septem ber Based on exp en d A nd th e O ctob er
itures w e ig h ts
expend itu re
in d exes (1 9 4 7 of—
w e ig h ts w ere—
49 = 100) w ere—
F o o d .................................................................................................
H o u s in g ..........................................................................................
A p p a r e l...........................................................................................
T ra n sp o rta tio n ..........................................................................
M ed ica l c a re ...............................................................................
P erson al c a r e ..............................................................................
R ea d in g and r ec re a tio n .......................................................
O th er g o o d s and se r v ic e s...................................................
1 1 5 .4
1 1 4 .8
1 0 5 .8
1 2 7 .7
1 1 8 .8
11 2 .1
1 0 7 .3
1 1 5 .9
$1, 204
1, 280
388
440
188
84
216
200
$1, 2 1 6 .0 4
1, 3 0 5 .6 0
3 9 9 .6 4
440
188
8 4 .4 2
2 1 4 .9 2
200
T o ta l ( a ll it e m s ) ......................................................
11 4 .1
4 ,0 0 0
4 ,0 4 8 .6 2
1
115.4 p lu s 1 p ercen t o f 1 1 5 .4 .
T h en th e aver
age ch an g e in
price w o u ld
be—
Percent
A nd th e O ctob er
ind exes (1 9 4 7 4 9 = 1 0 0 ) w o u ld
be—
+ 1
+ 2
+ 3
0
0
+ 0 .5
- 0 .5
0
1 1 1 6 .6
1 17.1
1 0 9 .0
1 2 7 .7
1 1 8 .8
1 1 2 .7
1 0 6 .8
1 1 5 .9
+ 1 .2
1 1 5 .5
The percentage change from the preceding period is then com
puted, as for individual items. The figures from the illustration,
for example, indicate that the average change in pork prices was
about 2 percent.
For each group the percentage change is then applied to the
index number for the preceding period to get the new index num
ber for that group. That is, suppose the food index for New
York were 110 in September, and the New York expenditure
weight for food in October showed a 2 percent increase over
September; the October food index for New York then would be
112.2 (110 plus 2 percent of 110).
In the last step in making an index for each city, expenditure
weights for all groups are combined and compared, as in the
table on page 10, using the procedures already outlined.
The same principle is used in calculating the United States
index. City expenditure weights, for each group and for the
total, are so combined that each city has an importance propor
tionate to the population it represents in the index. New York
City, for example, represents four times as many wage-earner
and clerical-worker families as Detroit, and a price change of 2
percent in New York would have four times as much effect on
the United States index as would the same change in Detroit.
Some Problems in Measuring Price Changes
Keeping the Items in the Index Constant
One of the difficult problems of price indejx-making is to price
the same quantities and qualities of goods ekch time so that the
index reflects price change and nothing else. But new articles
come onto the market and become popular; others virtually
disappear; and there are contant innovations in established
products. Eventually, such changes produce far-reaching shifts
in buying habits that require periodic general revisions of the
index, as described in section III (p. 15), if adjustments are not
made in the meantime. In any event, the Bureau must take ac
count of minor market changes in the course of its pricing opera
tions. In consequence, the index shows a larger or smaller price
change than a comparison of prices for strictly comparable mer
chandise would show, but these differences are relatively minor
and more or less offsetting, so far as can be determined.
2 5 6 6 9 7 — 58--------8
11
The necessary changes are made gradually, in the following
way:
(a) Basic changes in quality or si%e of unit priced. Some changes
involve the substitution of articles which differ in quality from
the articles they replace—nylon for rayon hose, for example.
Fortunately, such changes rarely occur overnight, and there is
usually a time at which both articles are on the market. How
ever, when the original disappears, for index purposes the price
for the substitute cannot be compared with the price of the
original. To do so would be equivalent to saying that, because
a housewife bought a pair of rayons for 75 cents one month and a
pair of nylons for $1.50 the next njonth, the price of rayon hose
had doubled. So, in order to measure only the price change,
the Bureau compares the price of the substitute article with its
own price in the preceding period, and the percentage change
shown by this comparison is used in computing the change in the
index over the period.
In items subject to long-term changes in quality, such as the
depreciation of housing and used cars, the Bureau uses specific
statistical adjustments to compensate. However, satisfactory
adjustments cannot be made for some persistent trends in quality
(e. g., technological improvements in household appliances over
the years) and their effect on the index cannot be estimated.
In addition, the unit size of a product priced for the index may
change. For example, recently a canner discontinued packing
peaches in No. 2 cans and packed instead the larger No. 2% can.
If the index were,to reflect the change in price from a No. 2 can
to a No. 2}{ can, it would measure the change in the size of the
can along with any change in price that had taken place. To
be sure that the index measures only the price change in such
instances, the substitution of one size for another is made in the
same way as that for quality changes.
(b) Introduction or deletion of items. On occasion, completely
new items must be priced or commodities which people no longer
buy must be dropped from the index. In such cases the distri
bution of the expenditure weights among the various items
in the index is adjusted to take account of the cost of the items
that are added or dropped. Surveys show that families make
such adjustments in their budgets, spending less for one kind of
12
goods in order to buy more of another. Accordingly, when such
items as baby foods are added to the index, the expenditure
weights of related food items are correspondingly reduced.
(c) W eight changes. As indicated earlier, for the year 1952 the
index expenditure weights are based on the pattern of expendi
tures characteristic of the standard of living of wage and salary
workers in United States cities. In calculating the index, the
expenditure weights for individual items rise and fall as prices
change. If, when prices change, families actually do continue to
buy the same quantities of various gooods and services, the
expenditure basis of the index can remain unchanged for con
siderable periods of time. But, as prices and incomes change,
families often buy more of some things and less of others. To
keep the importance of items in the market basket approximately
in agreement with their importance in family expenditures,
periodic sample surveys are made to find out what is actually
happening to family spending, so that index weights may be
adjusted when necessary.
Price Collection Problems
One problem encountered in pricing for the index concerns the
frequency with which certain prices can be obtained. The prices
of some housing items are collected only once each year: real
estate taxes and interest rates on mortgages change so slowly that
more frequent collection is unnecessary. Other items—chiefly
in food and apparel—are available in the stores only at certain
seasons. In between, their price movements must be estimated on
the basis of the best information available (e. g., the change in
prices for fresh fruits not currently on the market is assumed to
be the same as that for fresh fruits which can be priced). This
procedure may result in some short-term differences between the
estimates and actual prices (were they obtained); these are
corrected when the items are actually priced.
Another pricing problem arises because certain goods—prin
cipally consumers’ durable goods such as refrigerators and
automoblies—are sometimes sold at prices different from those
on the price tags. An accurate measure of the actual prices
would require knowing exactly the terms of each transaction,
which of course is impossible; therefore, the Bureau must rely
13
on the prices at which the goods are marked. The actual prices
would be somewhat lower in times when supplies were plentiful,
and somewhat higher when supplies were scarce. In the long
run, however, the index will differ very slightly from an index
based on transaction prices.
Other Problems
The very existence of the CPI depends on the voluntary co
operation of both consumers and merchants in responding to the
Bureau’s requests for information. Whenever information is
obtained by asking questions of individuals, some of the answers
contain some degree of inaccuracy. Bureau agents cannot always
obtain from individual consumers the exact details of their
expenditures, which may introduce slight errors into the market
basket; nor can they always get from sellers exactly the prices
charged for goods and services that meet the descriptions specified
for pricing. Generally, these “ errors” cancel each other out.
In one or two instances which involve deliberate under- or over
statement (nearly all consumers under-report expenditures for
alcoholic beverages, for example), the approximate magnitude
can be estimated and adjustments are made accordingly.
Any statistic based on a “ sample” of the various elements in
volved is bound to differ somewhat from one resulting from a
survey of the whole. Modern sampling techniques make it possible
to keep these differences—called “ sampling errors”—at a mini
mum, thereby making unnecessary the extravagance of a complete
enumeration, and most statistical measures are based on samples.
In the case of the CPI, an absolutely perfect index would be based
on the prices of a ll the transactions for all the articles bought
each month by a ll the 18 million wage earners’ and clerical
workers’ families in a ll 3,000 United States cities. The samples
actually used in compiling the CPI were carefully and scientifi
cally selected to accurately represent (1) the families whose price
experience the index is designed to measure; (2) the articles
which they purchase; (3) the cities where they live; and (4)
the stores where they trade. The use of these samples places no
serious limitations on the uses or the precision of the index,
because the “ sampling errors” that result can be measured and
therefore controlled and, furthermore, they tend to be offsetting.
14
III. The
Need for
Periodic
MID
THIRTIES
EARLY
F IFTIE S
Revision
Periodic modernization is a requisite of good statistics, not
confined to price indexes. This most recent revision is, in fact,
the fourth in the history of the Consumer Price Index. Postwar
surveys conducted in several cities prior to 1950 revealed that the
products being bought by families were considerably different
from those then in the market basket, which was based on family
spending in the mid-1930’s. Nor did the comparative importance
of the various items in the market basket correctly reflect current
consumer buying habits.
The index needed to be improved in other respects as well. It
was limited to large cities and was therefore not representative
of all United States cities. Economic conditions were very dif
ferent after the war, and a postwar, rather than a prewar, base
period was necessary to make the indexes more useful. The
Bureau wished also to reexamine the procedures used in com
piling the index, in the light of recent improvements in statistical
techniques.
For these reasons, the Bureau in 1949 began a comprehensive
program for revising the index, and the January 1953 index
figures were the first to appear on the revised basis. In summary,
the revision had the following results: (1) Cities of all sizes are
represented in the CPI; (2) it is based on consumer buying habits
in 1952; (3) it is calculated from prices for more items; (4) the
15
prices are collected in stores more widely representative of those
patronized by city workers’ families; (5) it is based on the
average of prices in the more recent years 1947-49 as 100; (6) im
proved statistical methods were introduced. (Appendix C con
tains a more detailed comparison of the revised and unrevised
indexes.)
Thus, the revision consisted primarily of modernizations and
improvements, and the revised index is not basically different
from earlier indexes. The earlier indexes have been converted
to the new base (see appendix D) to form a continuous series
beginning in 1913.
16
Extensive use of the Consumer Price Index led a congressional
committee to term it, in 1951, the Government’s “ most important
single statistic.’’ Its most widely publicized use is in the auto
matic adjustment of wages under “ escalator clauses’’ in collective
bargaining agreements. Its use in collective bargaining is
actually more widespread than this. Even where automatic
escalator clauses are not used, the index is a factor in determining
the wage rates of many workers. As a matter of fact, the index
was initiated during World War I when rapid changes in living
costs, particularly in shipbuilding centers, made such an index
essential in wage negotiations.
The index is also used, both directly and indirectly, by Federal,
State, and local government agencies in setting pay scales for
their employees. In addition, both the Congress and the exec
utive agencies of the Federal Government make wide use of the
index as a guide in determining general economic policy, par
ticularly with respect to wages, prices, and taxation.
Businessmen use the index in market analysis and sales and
advertising campaigns: For example, in advertisements comparing
the change in prices of a particular product with the change for
other kinds of goods in the index. There are instances of the
use of the index to adjust long-term leases for changes in prices,
or even to adjust the amount of alimony payments and annuities!
17
Most of these uses are suggested by the basic nature of the
index, as a measure of change in prices and purchasing power.
This also points up the inappropriateness of its use for certain
other purposes.
Under no circumstances can the index be used to measure
changes in living standards or in total living costs, since both are
responsive to many factors other than the changes in prices
measured by the index. A family changes its standard of living
according to its individual tastes and its individual income. So
the standard of living may rise in the face of rising prices, for
example, if incomes are rising faster; or it may fall if incomes are
lagging behind. The CPI likewise does not measure changes in
the total amount families spend for living, regarded by many as
the “ cost of living.” The CPI measures only changes in the
prices of goods and services; it does not include such costs as
income taxes. In addition, the index market basket remains the
same from month to month, while consumers actually do not
buy the same things from season to season and year to year.
Nor can the index be used to measure differences in price levels
between one place and another; it measures only time-to-time
changes in the various places. A higher index for one city does
not necessarily mean that prices are higher there than in another
city with a lower index; it merely means that they have risen
faster since the base period.
Most accurately, according to its definition, the index is used
to measure the effect of price change on purchasing power (or on
cost of living) of families or urban wage earners and clerical
workers, on whose expenditures it is based. Lacking a better
measure, it may be used similarly for other groups in the urban
population, but such uses are subject to “ errors of application,”
to the extent that the group’s expenditures, incomes, and various
other characteristics differ from those reflected in the index.
The risk of error in such applications of the index is greater in
short periods of time than in long ones. A use of the index
which would result in a substantial “ error of application” in
measuring month-to-month changes might still involve no
appreciable error in measuring changes over a number of years—
as from the bottom of a business cycle to the top, or from prewar
to postwar. This is true because great changes such as those
18
in a pronounced swing of the business cycle or in a prolonged
period of inflation or deflation penetrate to a ll parts of the econ
omy and have considerable effect on prices paid by a ll consumers.
Users of the index should also recognize certain limitations on
its precision which are common to statistical measures of this
kind. The examples of problems encountered in making the
CPI discussed earlier (p. 11) are typical of the ways in which
an index based on an average of the observations and responses
of samples of people will fall short of perfect accuracy. Limita
tions on the index have been examined by experts in economics
and statistics, by users of the index, and by a congressional com
mittee. The verdict of all these has, in general, been the same:
that the index, though of course not perfect, is a satisfactory
measure of what it sets out to measure and that it can be used
with confidence for the purposes for which it was designed.
19
Appendix A
Cities in which Prices are Collected for the Consumer Price Index, By Months in which They are Priced 1
Cities
All cities over 1,000,000
*New York, N. Y.-Northeastern New
Jersey....................................................
*Chicago, 111...........................................
*Los Angeles, Calif................................
*Detroit, M ich........................................
*Philadelphia, Pa.-Camden, N. J .........
*Boston, Mass.........................................
*Pittsburgh, Pa.......................................
*Cleveland, Ohio....................................
*Washington, D. C ................................
*Baltimore, M d......................................
*St. Louis, M o........................................
*San Francisco, Calif..............................
Pricing months
Jan.
Feb.
Mar.
Apr.
May
June
July Aug. Sept.
Oct.
Nov.
Dec.
Cities of 240,000-1,000,000
^Kansas City, M o.......................
*Minneapolis-St. Paul, M inn. ..
*Portland, Oreg...........................
^Houston, Tex.............................
*Scranton, Pa...............................
*Seattle, Wash.............................
*Atlanta, G a................................
^Cincinnati, Ohio.......................
Youngstown, Ohio...................
x
x
x
x
x
x
Cities of 30,000-240,000
Canton, Ohio.............................
Charleston, W. Va....................
Lynchburg, V a..........................
Evansville, Ind..........................
Huntington, W. Va.-Ashland, Ky
Middletown, Conn....................
Madison, Wis.............................
Newark, Ohio...........................
San Jose, Calif.....................
See footnote at end of table.
x
x
x
x
x
x
,
Cities in which Prices are Collected for the Consumer Price Index By Months in which They are Priced 1—Continued
Cities
Pricing months
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Cities under 30,000
Grand Forks, N. Dak..........................
Madill, Okla.........................................
Pulaski, V a............................................
Ravenna, Ohio......................................
Camden, A rk.........................................
Garrett, Ind...........................................
Rawlins, Wyo.......................................
Shawnee, Okla......................................
Anna, 111.....................................................
Glendale, Ariz.......................................
Grand Island, Nebr..............................
Laconia, N. H ..........................................
Lodi, Calif.............................................
Middlesboro, Calif................................
Sandpoint, Idaho..................................
Shenandoah, Iowa................................
x
x
x
x
*Cities for which indexes will be published.
x
x
X
x
x
X
x
x
x
X
X
X
x
x
x
x
x
X
X
X
X
x
X
x
X
x
x
X
x
x
x
x
x
x
x
x
x
X
X
x
1 Food, rent, and certain other items are priced monthly in all cities.
x
x
x
x
Appendix B
Items 1 Priced for the Consumer Price Index , and Their 1952 Relative Importance
Item
R ela tiv e
im p or
tance
A L L IT E M S .....................................
F O O D ...................................................
C ereals and bak ery p r o d u c ts..
C ereals:
F lou r, w h e a t..........................
B iscu it m ix ..............................
Corn fla k es...............................
R o lled o a ts ..............................
Corn m e a l.................................
R ic e ..............................................
B akery produ cts:
Bread, w h it e ..........................
Soda crackers.........................
V a n illa c o o k ie s.....................
M eats, p o u ltry , and fis h ...........
Beef:
R ound ste a k ............................
R ib r o a st...................................
C huck r o a st............................
H am bu rger...............................
Pork:
P ork c h o p s...............................
Sm oked h a m ..........................
B a c o n ..........................................
L am b, le g ......................................
V eal c u tle ts ..................................
O ther m e a ts:
F rankfurters............................
C anned lu n ch eo n m e a t. .
P ou ltry— F ryin g ch ick en s,
dressed and read y-toc o o k ........................................
F ish and seafood :
Fresh and frozen fin fis h .
C anned sa lm o n .....................
C anned tun a fish ..................
See fo o tn o te s at end o f tab le.
Item
D airy p ro d u c ts................................
Fresh m ilk , so ld in stores
and d e liv e r ed ..........................
M ilk , e v a p o r a ted .....................
B u tte r .......................... ....................
Ice crea m ........................................
A m erican c h e e se .......................
Fruits and v e g eta b le s..................
Fresh fruit:
O ran ges......................................
L e m o n s.......................................
G ra p efru it................................
A p p les.........................................
B an an as......................................
P ea ch es.......................................
G rap es.........................................
Straw b erries............................
W a term elo n s..........................
Fresh vegetab les:
P o ta to e s.....................................
S w eet p o ta to e s......................
G reen b e a n s.............................
C a b b a g e.....................................
C a rro ts.......................................
O n io n s........................................
T o m a to e s..................................
P ascal c e le r y ...........................
H ead le ttu c e ...........................
C anned fr u its:
O range juice, c a n n e d . . . .
P each es, ca n n ed ....................
Sliced p in eap p le, c a n n e d .
F ru it c o ck ta il, ca n n ed . . .
Canned vegetab les:
Cream sty le corn , c a n n e d .
Peas, can n ed ...........................
T o m a to es, can n ed ...............
Strained b ab y fo o d .............
100.00
30.08
3 .0 9
.5 6
.1 6
.10
.0 7
.0 4
.0 8
1.42
.1 7
.4 9
7 .9 9
.9 8
.1 8
.6 5
.7 2
.7 6
.6 5
.8 1
.21
.22
.7 9
.2 7
1 .1 7
.3 1
. 10
.1 7
23
R e la tiv e
im p or
tance
4 .1 9
2 .4 9
.2 9
.5 6
.3 4
.5 1
4 .5 2
.3 1
.0 4
.0 7
.2 5
.2 4
.11
.0 9
.0 8
.1 8
.5 3
.0 7
.10
.0 7
.11
.10
.21
.12
.22
.1 9
.1 7
.10
.0 9
.1 3
.1 5
.20
.1 4
Items 1 Priced for the Consumer Price Index, and Their 1952 Relative Importance—Con.
Item
F ru its and v eg eta b les— C on.
Frozen fr u its:
O range juice, concentrate, fro zen ..................
Straw berries, fr o ze n ..........
Frozen v egetab les:
P eas, fr o ze n .............................
G reen beans, fr o ze n ...........
D ried fru its and v e g e ta b le s:
D ried prunes ........................
N a v y b e a n s.............................
O ther food b o u g h t to be prepared at h o m e ..................
P a rtia lly prepared fo o d s:
V egetab le so u p .....................
B eans w ith p o r k ..................
C on dim en ts and sauces:
S w eet g h e r k in s.....................
T o m a to c a tsu p ......................
N o n -a lc o h o lic beverages:
C o ffe e ..........................................
T e a ................................................
C ola d r in k s.............................
F ats and o i ls :
M a rg a rin e................................
L a r d .............................................
V egetab le sh orten in g . . .
Salad d r e ssin g ........................
P ean ut b u tte r .........................
Sugar and sw eets :
Sugar, w h ite , g ra n u la ted .
C orn sy r u p ...............................
G rape j e lly ..............................
C h o co la te b a r s......................
E g g s, fr e sh ....................................
M iscellan eou s food s:
F lavored g e la tin d essert.
See fo o tn o te s at end o f tab le.
R ela tiv e
im por
tance
Item
0 .1 3
.0 3
.0 8
.0 5
.0 8
.0 8
5 .6 9
.4 0
.1 5
.2 3
.10
1 .1 4
.12
.3 3
.2 5
.11
.3 1
.1 9
.0 9
.3 7
.12
.1 3
.2 8
1 .2 6
.11
24
R e la tiv e
im por
tance
F ood a w a y from h o m e ..............
R estau ran t m e a ls:
L u n ch eo n s................................
4 .6 0
A P P A R E L ..........................................
M en ’s a p p a rel..................................
T o p c o a ts........................................
J a c k e ts.............................................
S w ea te rs.........................................
S u its, h e a v y .................................
S u its, lig h t w o o l ......................
S u its, r a y o n ..................................
Slack s, r a y o n ................. .............
Slack s, w o o l ................................
T rousers, w o r k ..........................
O v e r a lls..........................................
Sh irts, w o r k ................................
G lo v e s, w o r k ..............................
S h irts, sp o r t.................................
Sh irts, b u sin e ss..........................
Sh orts, b r o a d c lo th ..................
U n d ersh irts, k n it .....................
P a ja m a s..........................................
S ock s, c o tto n ..............................
Sock s, r a y o n ................................
H a ts, f e lt ........................................
B o y s’ a p p a rel...................................
S u its, w o o l ...................................
S lacks, r a y o n ...............................
J a c k e ts.............................................
Sh irts, sp ort, w o v e n ..............
D u n g a rees......................................
U n d ersh o rts..................................
9 .7 1
2 .6 3
W om en ’s a p p a rel...........................
C oats, h e a v y w o o l, p la in . .
C oats, w o o l, fu r-trim m ed 2 .
C oats, lig h t w e ig h t w o o l. .
3 -5 8
.3 8
.0 9
.1 9
4 .6 0
.22
.1 5
.0 6
.4 3
.10
.11
.0 5
.1 5
.21
.1 4
.0 8
.0 5
.11
.1 9
.0 5
.1 7
.0 6
.1 5
.0 7
.0 8
.4 8
.11
.0 5
.0 6
.11
. 10
.0 5
Items 1 Priced for the Consumer Price Index , and Their 1952 Relative Importance—Con.
Item
R e la tiv e
im p or
tance
W om en ’s apparel— C on .
C oats, m uskrat 2 .......................
Su its, w o o l ...................................
Su its, r a y o n ..................................
D resses, w o o l ..............................
D resses, co tto n , str e e t...........
D resses, r a y o n ............................
H ousedresses, c o tto n .............
Sk irts, r a y o n ...............................
S k irts, w o o l .................................
B louses, r a y o n ...........................
Sw eaters, w o o l ..........................
S h o r ts...............................................
S lip s, n y lo n tr ic o t...................
S lips, r a y o n ..................................
P an ties, r a y o n ............................
G ir d le s.............................................
B rassieres.......................................
N ig h tg o w n s , r a y o n ................
S to ck in g s, n y lo n ......................
G lo v e s, c o tto n ...........................
H an d b ags, fa b r ic ......................
G ir ls’ a p p a rel..................................
C o a ts...............................................
D resses, c o tto n ...........................
S k irts, w o o l .................................
Sw eaters, card igan w o o l . .
P a n tie s.............................................
A n k le ts, c o tto n .........................
O ther a p p a r el...................................
D ia p e r s............................................
Y ard go o d s:
P erca le........................................
A c eta te ta ffe ta .......................
M iscella n eo u s 3..........................
See fo o tn o te s at end o f ta b le.
0.11
.2 8
.0 9
.0 9
.1 8
.3 8
.1 4
.10
.0 3
.1 5
.0 8
.0 3
.0 8
. 12
.10
.12
.11
.11
.4 6
.0 4
. 12
.68
.1 8
.1 4
.0 7
.0 9
.12
.0 8
.8 4
.1 9
.1 4
.0 4
.4 7
25
Item
R e la tiv e
im p or
tan ce
F o o tw ea r. . . ....................................
O xford and ties, w o m e n ’s . .
P um ps, w o m e n ’s .......................
P la y sh oes, w o m e n ’s .............
Street sh oes, m en ’s ..................
W ork sh oes, m en ’s ..................
C h ild ren ’s sh o e s ........................
R ubbers, m en ’s d r e ss.............
Sh oe rep airs:
H a lf soles and h eels,
m en ’s ......................................
H eel lifts, w o m e n ’s ...........
1.50
H O U S IN G .........................................
S h elter...................................................
R en t:
R esid en tial ren ts..................
O th er sh elter:
H o u sin g a w a y from
h o m e .......................................
H om e ow n er exp en d i
tures :
Sales prices o f h o m e s. .
R eal estate ta x e s.............
M o rtg a g e i n t e r e s t
r a te s...................................
P rop erty
insurance
r a te s...................................
G arage rep ain t jo b . . . .
E xterior h o u se p a in t. .
C on tract price o f re
p a in tin g d i n i n g
r o o m .................................
P ain t b r u sh ........................
R esh in g lin g h o u s e
r o o f.....................................
3 2 .0 2
1 7 .2 2
.1 7
.20
.1 5
.3 0
.1 5
.3 0
.0 8
.0 4
.11
5 .3 4
.3 7
5 .9 6
.9 7
1.52
.21
.1 4
.2 5
.2 5
.3 0
.2 7
Items 1 Priced for the Consumer Price Index, and Their 1952 Relative Importance—Con.
Item
SH E L T E R — C on tin u ed
H om e ow n er ex p en d i
tures— C on tin u ed
R ep lacin g h o t w ater
h e a te r ................................
K itch en cab in et sin k ,
n o n in sta lled ..................
In stalled sin k fa u c e t...
R efin ish in g d i n i n g
room flo o r . . “ ............
Lum ber for porch
flo o r in g ...........................
R e la tiv e
im p or
tance
•13
.3 0
.1 6
.2 9
1 .9 0
Solid fu els and fuel o i l 4 ...........
C oal:
A n th r a c ite ...............................
B itu m in o u s..............................
W ood or p r e sto lo g s................
F uel o i l ............................................
1 .2 8
H ou sefu rn ish in gs and eq u ip
m en t— C on tin ued
F loor coverin gs:
R u gs, w o o l..............................
C otto n scatter r u g s...........
R u gs, fe lt b a se .......................
F u rn itu re:
L iv in g room su ite s.............
Sofa b ed s...................................
D in e tte sets, w o o d .............
B edroom s u ite s .....................
B edsp rin gs, c o il......... ..
M attresses, innerspring
co n str u c tio n .......................
D in e tte sets, c h r o m e . . . .
H o u seh o ld ap p liances:
R efrigerators, e le ctr ic. . .
C o o k sto v e s, gas or
electric ...................................
W ash in g m ach in es, elec
tr ic ............................................
V acuum cleaners, elec
tr ic ............................................
S ew in g m ach in es, elec
tr ic ............................................
T oasters, e le c tr ic ..................
O ther h o u sefu rn ish in g s:
P ans, a lu m in u m ...................
53 -p iece d in n erw are s e t s .
B r o o m s.......................................
E lectric lig h t b u lb s...........
Paper su p p lie s.......................
0 .7 6
G as and electricity 4..................
G as:
R esid en tial h e a tin g ...........
O th er th an resid en tial
h e a tin g ..................................
E le c tr ic ity .....................................
H ou sefu rn ish in gs and eq u ip
m ent .............................................
T e x tile fu r n ish in g s:
S h e e ts..........................................
B lan k ets, w o o l.....................
Bed sp read s.............................
T o w e ls, b a th ..........................
T a b le c lo th s.............................
D rapery fa b r ics.....................
C urtains, c o tto n and
r a y o n ......................................
See fo o tn o te s at end o f tab le.
Item
.3 1
.5 9
1.00
.2 4
.5 0
.0 3
.5 1
6 .6 5
.22
.0 9
.0 8
.0 7
.0 3
H o u seh o ld o p e r a tio n ................
L aundry so a p ...........................
D ry c le a n in g .............................
L aundry services, finish ed
and sem ifin ished bu ndle
se r v ic e ......................................
.20
.1 6
26
R e la tiv e
im p or
tance
0.38
.06
.12
.55
.17
.13
.54
.06
.18
.21
.97
.51
.53
.22
.17
.23
.23
.16
.10
.05
.23
4.97
.64
1.24
.68
Items 1 Priced for the Consumer Price Index , and Their 1952 Relative Importance—Con.
Item
H o u seh o ld o p eration — C on .
A u to m a tic laun dry service
(la u n d e r e tte )..........................
R esid en tial telep h o n e r a te s.
P o sta g e ............................................
D o m estic service, day
w o r k e r s......................................
R esid en tial w ater r a te s. . . .
Ice (d e liv e r e d )............................
T R A N S P O R T A T IO N ................
A u to m o b iles, n e w ........................
A u to m o b iles, u s e d ........................
A u to m o b ile rep a irs......................
T ir e s.......................................................
G a so lin e . . . ; ....................................
M o to r o il, r e g .................................
A u to m o b ile in su ra n ce................
R eg istra tio n fe e s ............................
L ocal p u b lic tr a n sp o rta tio n ..
R ailroad coach fa r e s...................
M E D IC A L C A R E .........................
P h y sic ia n s’ services:
O b stetrical c a se ........................
A p p e n d ec to m y ...........................
T o n sille c to m y ............................
O ffice v i s i t ....................................
H om e v is it ....................................
D e n tists’ fees (u su a l charge
for service to an a d u lt):
F illin g ..............................................
E x tr a c tio n .....................................
O p to m etrists’ fees:
E yeglasses— com p lete, in
clu d in g e x a m in a tio n . . . .
H o sp ita l r a te s:
M en ’s p ay w a r d ........................
See fo o tn o te s at end o f tab le.
R ela tiv e
im p or
tance
Item
H o sp ita l rates— C on .
Sem ip rivate r o o m ....................
P rivate r o o m ...............................
G rou p h o sp ita liz a tio n ,
m o n th ly rate for fa m ily . . .
P rescription s :
C apsule, n o n -n a r co tic ............
L iq u id , n a r c o tic ........................
P e n ic illin .......................................
M u ltip le v ita m in con cen
trates ...............................................
A sp irin , u n b ran d ed......................
M ilk o f m a g n e sia ..........................
0.10
1 .0 8
.2 6
.5 4
.3 3
.10
11.00
2 . 83
1 .9 7
1.10
.35
P E R SO N A L C A R E ......................
Barber and b eau ty sh o p serv
ices:
M en ’s hair c u t ...........................
Perm anent w a v e .......................
Sh am p oo and w a v e s e t . . . .
T o ile t g ood s:
T o ile t so a p ...................................
C lean sin g tissu e s.......................
T o o th p a ste ...................................
S h a m p o o ........................................
S h avin g crea m ............................
H om e perm anent w a v e re
f i ll ..................................................
Face pow d er .............................
Face cream ....................................
R azor b la d e s................................
San itary n a p k in s.......................
2.25
.21
.8 1
.2 8
.9 1
.2 9
4 .7 1
.1 6
.1 6
.0 8
.6 7
.6 7
.6 4
.1 6
R E A D IN G A N D R E C R E A
T I O N ...........................................
R ad ios, tab le m o d e l....................
T elev isio n s e ts .................................
T elev isio n rep airs..........................
.2 7
.0 6
27
R e la tiv e
im p or
tance
0 .0 6
.0 6
.9 0
.0 9
.1 8
.11
. 20
.1 8
.0 6
2.12
.5 9
.1 3
.1 7
.21
.1 4
.21
.11
.0 6
.0 4
.1 3
.1 3
.1 4
.0 6
5 .3 7
.3 8
.9 9
.0 4
Items 1 priced for the Consumer Price Index, and Their 1952 Relative Importance—Con.
Item
M o tio n picture ad m ission s:
A d u lt................................................
C h ild .................................................
T o y s (c a ta lo g p r ic e s).................
Sp ortin g eq u ip m en t (c a ta
lo g p r ic e s).....................................
N ew sp a p ers........................................
R e la tiv e
im p or
tan ce
Item
OTHER GOODS A N D
SE R V IC E S...............................
C ig a r ette s............................................
C ig a r s....................................................
B eer.........................................................
W h isk e y ...............................................
M iscellan eou s expenses 5 ...........
1 .1 4
.2 8
.3 2
1 .2 9
.9 3
1 In som e cases
2 N o t priced in
R e la tiv e
im por
tance
4 .9 9
1 .7 3
.1 4
1 .3 7
.9 2
.8 3
m ore th an o n e sp ecification is priced to represent a g iv en item .
certain c ities w h ere, due to clim a te, th e y w ere n o t im p ortan t in
fa m ily exp en d itu res.
3 F a m ily exp en d itu res for g ifts o f “ o th er a p p a rel,” p in s, n eed les, thread, zip
pers, yarn, d y ein g , dressm aker, ta ilo r , w a tc h rep airs, a d u lts’ jew elry , e tc ., are
represented in th e in d ex b y th e w e ig h te d average o f prices for all priced item s in
th e to ta l apparel group .
4 B ecau se o f consid erab le v a ria tio n b etw een c ities and region s in th e ty p e o f
fuel used , all fu els are n o t priced in each c ity .
5 F a m ily exp en d itu res for n o n m o rtg a g e in terest, b an k service charges, funerals,
leg a l services, real estate n o t used for fa m ily , and raisin g o w n fo o d are represented
in th e in d ex b y th e w e ig h te d average o f all priced item s.
28
Appendix C
Basis of the Consumer Price Index Before and After the 1950 Adjustment and After the 1953 Revision 1
O ld In dex
R evised Index
A d ju sted Index*
B ase p e r io d .
1 9 3 5 -3 9 .
1 9 3 5 -3 9 .
1 9 4 7 -4 9 .
E x p en d itu re b asis o f th e in
d ex.
A v era g e exp end itu res o f fam ilies
o f w a g e earners and clerical
w ork ers in 42 large cities in
1934-36.
A verage p o stw a r exp en d itu re p a t
tern o f w a g e earners' and cleri
cal w o r k e r s’ fa m ilie s in large
c itie s (b ased on p o stw a r e x
pend iture surveys in 7 c ities and
o th e r d a ta ).
A verage 1952 expend itu re pattern
characteristic o f th e standard o f
liv in g o f urban w a g e and cleri
cal w o rk ers’ fam ilies (based on
1950 expenditure survey in 91
c itie s, adjusted to 1952).
P o p u la tio n co verage:
F a m ily s iz e ...................................... T w o or m ore p erso n s............................ N o c h a n g e .................................................... N o change.
E m p lo y m en t:
O ccu p a tio n o f c h ie f earn W age earner or clerical w ork er. . . N o c h a n g e .................................................... N o ch an g e.
er or h ead o f fa m ily .
L e n g th o f e m p lo y m e n t. . . A t lea st 1,008 hou rs in 36 w e e k s. . 26 w e e k s ........................................................ N o specific requirem ent, but m ajor
p o rtio n o f fa m ily h e a d ’s incom e
m ust be from em p loym en t as
w a g e earner or nonsu pervisory
clerical w orker.
See footnotes at end of table.
Basis of the Consumer Price Index Before and After the 1950 Adjustment and After the 1953 Revision Continued
O ld In dex
P o p u la tio n coverage— C on .
In c o m e ................................................ M in im u m o f $500 (a t lea st $300
for c h ie f earn er). M axim u m
for salaried w ork ers: $ 2,000
a n n u a lly or $200 in any one
m o n th . N o upper lim it on
earn in gs o f w a g e earners or
to ta l fa m ily in com e. L ess than
o f in co m e cou ld be from
in terest, d iv id en d s, ren ts, g ifts,
e tc. F a m ilies o n direct or w o rk
relief exclu d ed .
P rice b asis o f in d e x :
F requ en cy o f p rice c o lle c F o o d p rices m o n th ly in 56 cities;
p rices o f o th e r g o o d s and serv
tio n .
ices m o n th ly in 10 c ities, quar
te rly in 24 o th e r s, for a m o n th ly
to ta l o f 18.
A d ju sted Index*
F am ily in com e under $10,000 after
taxes. N o lo w e r in com e lim it
except th a t fa m ilies w ith no
incom e from w a g e s or salaries
w ere exclud ed .
R evised Index
N o ch an g e.
N o c h a n g e ..................................................... F o o d s and ren ts, and a lim ited
num ber o f o th er im p ortan t item s
priced m o n th ly in 46 cities;
o th e r g o o d s and services in 17
or 18 c ities each m o n th , w ith
co m p lete coverage o f all at
lea st on ce every 4 m o n th s.
N u m b er o f c itie s
C o m m o d ity co v era g e:
N o . o f it e m s ...................................
F o o d ................................................
R e n t................................................
A p p a r e l.........................................
H o u se fu r n ish in g s...................
F u e l..................................................
O th e r ..............................................
Im p ortan t ch a n g es:
F o o d a w a y from h o m e . . .
34 la rg e c ities (n o n e less than
50,0 0 0 p o p u la tio n ; o n ly one
w ith 1950 p o p u la tio n o f less
th a n 1 00,000). F ood prices in
22 ad d itio n a l cities.
N o ch ange
Sam ple o f U . S. urban places: 46
c ities, ran gin g in size from
ab ou t 2,500 to N e w Y ork C ity ,
w ith abou t 9,000,000. See com
p lete lis t in app en dix A .
A b o u t 2 0 0 ....................................................
51 ite m s .........................................................
3 7 ,0 0 0 d w e llin g s ....................................
62 ite m s .........................................................
25 ite m s .........................................................
10 ite m s .......................................................
51 ite m s .......................................................
A b o u t 2 2 5 ...................................................
60 ite m s ........................................................
52,000 d w e llin g s .......................................
66 ite m s ........................................................
29 ite m s ........................................................
11 ite m s ........................................................
58 ite m s. . ...................................................
A b o u t 300.
90 item s.
3 2,000 d w ellin g s.
75 item s.
35 item s.
10 item s.
90 item s.
N o c h a n g e ..................................................
R estau ran t m eals priced.
N o c h a n g e ..................................................
U sed cars priced.
A d justed for “ n e w u n it b ia s”
w h ic h had arisen because in d ex
fa iled to ta k e accou n t o f th e
h ig h er lev e l a t w h ic h h o u sin g
b ein g rented for first tim e cam e
o n to th e m arket d u rin g w ar and
p o stw a r rent co n tro ls and h o u s
in g sh ortages.
N o ch ange.
E stim a ted to h a v e sam e price
m o v em en t as fo o d s b o u g h t for
h o m e con su m p tion .
U sed c a r s...................................... E stim a ted to h a v e sam e price
m ovem en t as n ew cars.
R e n t................................................. B ased o n rents for sam e h o u sin g
from on e price c o lle ctio n to
n e x t.
See footnotes at end of table.
Basis of the Consumer Brice Index Before and After the 1950 Adjustment and After the 1953 Revision —Continued
O ld In d ex
C o m m o d ity coverage— C on .
Im p o rta n t ch a n g es— C on .
H o m e o w n e r sh ip c o s t s .. . H o m e pu rch ase n o t in clu d ed in
in d ex . M a in ten a n ce costs e sti
m ated to h a v e sam e price m o v e
m en t as ren ts.
^
A d justed In d ex *
R evised Index
N o c h a n g e ..................................................... H o m e purchase inclu ded and
p r ic e d . M a in t e n a n c e ite m s
priced.
* T h e 1953 r ev isio n w a s a n ticip a ted in so m e respects b y th e d ecision to m ake certain in terim adju stm ents in th e in d ex as a result o f th e
‘ ‘em erg en cy ’ ’ im m ed ia te ly fo llo w in g th e o u tb rea k o f h o stilitie s in K orea; th e CPI b ein g a k e y m easure in th e w a g e and price con trol program
au th orized b y C on gress in th e fa ll o f 1950, th e Bureau fe lt it sh ou ld n o t postp on e im p rovem en ts in th e in d ex for w h ic h th e necessary infor
m a tio n w a s a v a ila b le. In effect, th e ad ju sted in d ex w as an interm ediate step in th e com p reh en sive rev isio n com p leted in 1953.
Appendix D
Consumer Price Index, United States: All Items, Annual Averages, 1913-52
[1947-49=100] 1
Year
1 9 1 3 .....................................................
1 9 1 4 .....................................................
1 9 1 5 .....................................................
1 9 1 6 .....................................................
1 9 1 7 .....................................................
1 9 1 8 .....................................................
1 9 1 9 .....................................................
1 9 2 0 .....................................................
1 9 2 1 .....................................................
1 9 2 2 .....................................................
1 9 2 3 .....................................................
1 9 2 4 ......................................................
1 9 2 5 .....................................................
1 9 2 6 .....................................................
1 9 2 7 .....................................................
1 9 2 8 .....................................................
1 9 2 9 .....................................................
1 9 3 0 ......................................................
1 9 3 1 ......................................................
1 9 3 2 .....................................................
Year
Index
1 9 3 3 ....................................................
1 9 3 4 ...................................................
1 9 3 5 ...................................................
1 9 3 6 ....................................................
1 9 3 7 ...................................................
1 9 3 8 ...................................................
1 9 3 9 ...................................................
1 9 4 0 ...................................................
1 9 4 1 ...................................................
1 9 4 2 ....................................................
1 9 4 3 ...................................................
1 9 4 4 ...................................................
1 9 4 5 ...................................................
1 9 4 6 ...................................................
1 9 4 7 ...................................................
1 9 4 8 ...................................................
1 9 4 9 ...................................................
1 9 5 0 ...................................................
1 9 5 1 ....................................................
1 9 5 2 ...................................................
4 2 .3
4 2 .9
4 3 .4
4 6 .6
5 4 .8
6 4 .3
7 4 .0
8 5 .7
7 6 .4
7 1 .6
7 2 .9
7 3 .1
7 5 .0
7 5 .6
7 4 .2
7 3 .3
7 3 .3
7 1 .4
6 5 .0
5 8 .4
Index
5 5 .3
5 7 .2
5 8 .7
5 9 .3
6 1 .4
6 0 .3
5 9 .4
5 9 .9
6 2 .9
6 9 .7
7 4 .0
7 5 .2
7 6 .9
8 3 .4
9 5 .5
1 0 2 .8
1 0 1 .8
1 0 2 .8
1 1 1 .0
113-5
1 T h e C PI, form erly calcu lated o n th e base 1935-39 = 100, h as been converted
to th e n ew base (1 9 4 7 -4 9 = 100) in com p lian ce w ith recom m en d ation s o f th e U . S.
Bureau o f th e B u d get, O ffice o f S ta tistica l Standards. In dex series on th e n e w base
for “ all ite m s ,” fo o d , and ren t, are av a ila b le for period s from 1913 to d ate; ind exes
for oth er group s from January 1947 to d ate. B eg in n in g January 1953 th e in d ex
structure has been revised .
33
Appendix E
Selected Bibliography
Consumers’ Price Index, Hearings before a Subcommittee of the
Committee on Education and Labor, House of Representatives,
82d Cong., 1st Sess., with Report of Subcommittee appended
House Doc. 404, 82d Cong., 2d Sess.
Consumer Expenditure Study, 1950: Field Methods and Purposes
Monthly Labor Review, January 1951.
Selection of Cities for Consumer Expenditure Survey, 1950,
Monthly Labor Review, April 1951.
Survey of Consumer Expenditures in 1950, Monthly Labor
Review, August 1952. Errata: Monthly Labor Review,
September 1952.
Survey of Consumer Expenditures in 1950: Interpretation and
Use of the Results, Monthly Labor Review, October 1952.
Taxes and the Consumers’ Price Index, Monthly Labor Review,
January 1953.
The Revised Consumer Price Index, Monthly Labor Review,
February 1953.
Family Income, Expenditures, and Savings in 1950. Bulletin
No. 1097 (Revised). Bureau of Labor Statistics. Depart
ment of Labor.
U. S. GOVERNMENT PRINTING OFFICE: 1953
@FedFRASER