CE Data in the CPI CE Data in the CPI

Production Requirements 

and Redesign Interests

William Casey

Economist

Consumer Price Index

Consumer Expenditure Survey Data Users 

Forum

June 21st, 2010

Introduction 

 The CPI is a Cost The CPI is a Cost-of-Livin

Livin

designed to answer the fo

“What is the cost, at thi

prices, of achieving the 

actually attained in t

 BLS Handbook of Methods

Published CPI Index Series

 CPI for All Urban Consumers 

(CPI-U)

 CPI for Urban Wage Earners and 

Clerical Workers (CPI-W)

 Chained CPI for All Urban 

Consumers (C-CPI-U)

3

Consumers (C CPI U)

Major Uses o

 The CPI is used to ad

The CPI is used to ad

Social Security benefiIncome bracket adjusIncome eligibility requ

Income eligibility requ

School lunch costsC t os -of-li i d

living wage ad
Four Surveys in the CPI

1. Consumer Expenditure Survey ( Consumer Expenditure Survey (CE)

 Source of weights Limited source of basic weights for C&S Sample Limited source of basic weights for C&S Sample

2. Point-of-Purchase Survey (TPOPS)

 S li f f C&S P i i S Sampling frame for C&S Pricing Survey

3. Pricing Survey (C&S)

 Source of prices for goods and services

4. Housing Survey (HOUSING)

5

 Source of prices for rent and OER

Uses of CE Data 

 Aggregation Weigh

Aggregation Weigh

Annualized ExpendituMonthl d 

y Expenditure 

 Commodities and S

Item Sample SelectioPercent of POPSCAT (

 Research

CPI Estimation Stages CPI Estimation Stages

1st

St

2nd

$ $ $ $ $ $ $ $

Stage

$$ $

C&S, Housing Stage

$ $ $ $

indexes

8,018 

$ $ $ $$ $ $ $ $

$

$$

$

$

$ $ $ $ $ $ $ $ $ $ $ $

125,000 C&S price quotes

50,000 rents

8,018 

elementary cells

(211 items x 38 areas)

CE Published 

cpi

weights

indexes

7

Uses of CE Data 
Classification of the Market 

Basket

 CPI’s classification structure is broken 

d it own

n

to:

 8 Major Groups

– 70 Expenditure Classes

• 211 Item Strata

303 Entry Level Items (ELIs) 303 Entry Level Items (ELIs)

• 750 Universal Classification Codes 

( ) UCCs

Number of UCCs

per ELI 1 2 3 4 5 6 7 8 9 12 13 14 18

9

Percent of ELIs 51% 22% 8% 9% 2% 2% .9% .9% .7% .9% .7% .9% .7%

Item Detail

HK Appliances

HK01 Major appliances

Expendi

Major appliances Ite

HK02 Other appliances

HK021 FLOOR CLEANING EQUIPM

Ite

320511 ELECTRIC FLOOR CLEANIN

HK022 SMALL ELECTRIC KITCHEN 

320521 SMALL ELECTRIC KITCHEN 

HK023 OTHER ELECTRIC APPLIAN

300411 PURCH/INST WINDOW A/300412 PURCH/INST PURCH/INST WINDOW A/320522 PORTABLE HEATING/COOL

690241 SMOKE ALARM PUR/RENT 

690242 SMOKE ALARM PUR/RENT 

690244 OTH HH APPL RNTR

690245 OTH HH APPL OWND

Area Detail

 38 elementary Areas 87 PSUs 31 PSUs correspond directly to Areas 31 PSUs correspond directly to Areas

Region Area Area Name

PSUName PSU City

A312 Washington, DC A312 Washington Washington

X342 Albany, GAX344 Norfolk, VAX346 Pine Bluff, AR

South Region X300 Smaller South Region PSUs

X346 Pine Bluff, ARX350 Richmond, VA

X352 Port Arthur, TX

X374 San Antonio, TX

11

Antonio, TX

X376

Oklahoma City,

OK

Annual and 

Expenditure Expenditure 

 Biennial Wei

ght Perio

and CPI-W Index Ser

 Monthly Weights use

Inde Se es x Series

 Two stages of CPI In

Second stage weights 

Second stage weights 
Relative Importance of Basic 

Goods and Services in the CPI and Services in the CPI

Owner's 

Equivalent Rent

23.59%

Rent 

5.97%

Gasoline

4.34%

Used

Vehicles

2.01%

Fast Food

2 36%

Car 

Insurance Electricity

2 85%

New Vehicles 3.57%

Full Service Restaurants

2.36% 2.49% 2.85%

2.87%

CE Diary Survey Ca

Diary Survey Ca

DESCRIPTION BLENDERCANNER ELECTRICCOFFEE GRINDERCOFFEE MAKERCOFFEE MAKER ELECTRICCOFFEE MAKER WITH CLOCK RADIOCOFFEE WARMERCONVECTION OVENCONVECTION OVENCROCKPOTELECTRIC KNIFEFOOD PROCESSORHOT PLATE HOT PLATEHOT TRAYICE CREAM FREEZER ELECTRICICE CREAM MAKER ELECTRIC

CE Interview Survey Category 

Mapping

ELI

HK022

UCC

320521

Question

1

CUES ITEM_CODE

560

15

CPI Adjustm

Dat

 Adjust COST to meet CPI ma

Adjust COST to meet CPI ma

 Food on Trips – increase $ of Diar

share of total food expenditures rep

 Rental equivalence of Major Ap

Rental equivalence of Major Ap

expenditures of owners by probabil

 Rental equivalence of Househo

owners,gp usin sample mean of like-

 Gasoline Allocation – Allocate ga

Premium

 Medical Care – convert rep 

orted e

net-out-of-pocket expense for each 

 Medical Care Insurance – allocat

services, leaving “retained earnings

 Other adjustmentsELI variable to 
CPI Adjustments to CE 

Data

Estimates of average annual expenditure per consumer unit, CPI-U population, 2008:

CPI

$ 46 730

CE

$ 46,730 < $ 50 486 ,

 Owner Shelter: CPI=rental eq , gg , uivalence, CE=mortgage interest, taxes Owner Maintenance/Repair/Appliances and Insurance: CPI 

reduced to rental equivalence amount

 Vehicles: Vehicles: CPI = gross price; CE gross price; CE net = price CPI Excludes:

 Cash Contributions P lI d i Personal Insurance and pensions Vehicle finance charges

Expenditure Weight Pro

t

Hy

Index Estim

t

Hy

Index Estim

CE

data

base

PSU-to-AREA

Define parm file

Variables

§1

S

Index 

CE

data

base

PSU-to-AREA

Define parm file

Variables

§1

S

Index 

UCC-to-ELI

parm file

UCC-to-SRC

parm file

Gasoline

parm file

Preprocess CE data

adjust COST; 

add ELI variable

§2

Area Mapping

adjust population wts; 

map to PSU, AREA

§3

CPI

micro-lev

data tab

Sum data

§4

UCC-to-ELI

parm file

UCC-to-SRC

parm file

Gasoline

parm file

Preprocess CE data

adjust COST; 

add ELI variable

§2

Area Mapping

adjust population wts; 

map to PSU, AREA

§3

CPI

micro-lev

data tab

Sum data

§4

Sum data

ELI-PSU-MO level

Calculate 

ELI ISS

probabilities

§5

CPI

ELI ISS

data table

CPI

§4

data table

Sum data

ELI-PSU-MO level

Calculate 

ELI ISS

probabilities

§5

CPI

ELI ISS

data table

CPI

§4

data table

to

SMS

Use Case 4.5.4

to

Superlative

Index Estimation System

to

SMS

Use Case 4.5.4

to

Superlative

Index Estimation System

d

KEY:

Functional processing stepIntermediate output data tableFinal output data table

Input dataInput parameter file

Annual and Monthly 

Expenditure Weights Summary Expenditure Weights Summary

 CPI net out CPI net out-of-pocket-expense expense Urban, wage-earning, and elderly 

populations

 Month and year of purchase Item Strata and Area detail expenditure 

estimates

19

Uses of CE Data 

 Aggregation Weigh

Aggregation Weigh

Annualized ExpendituMonthl d 

y Expenditure 

 Commodities and S

C&S Sample SelectionPercent of POPSCAT (

 Research
C&S Sample Selection

 Multi-step process: step process:

1. Outlet Selection (done in TPOPS)2. ELI Selection

3. Unique product selection

 For ELI Selection, CPI requires ELI-level 

expenditure detail from each PSU

In contrast to Item expenditure detail for 

each Area required for expenditure weights

Creates sample size concerns

21

C&S Sample S

 ITEM = Major Appliances (HK01) AREA Washington DC (A312) 

p

 AREA = Washington, DC (A312) SAMPLE ROTATED = August 2011 OUTLET HITS = 2 ITEM HITS = 4

 # 

 ITEM HITS 4 TOTAL SAMPLE SIZE = 8

ELI TITLE

Reports

(A312)

1 HK011 Refrigerators & Freezers Refrigerators & Freezers 19 2 HK012 Washers & Dryers 34 3 HK013 Ranges & Cooktops 11 4 HK014 Microwave Ovens Microwave Ovens 14 

CPI Unique Product Selection (in-store)

 Selection of unique appliance

for ELI HK012 (Washers & Dryers)

B Spec.

Sample % Spec. Name Spec. Frequency

A Spec.

A1 - Top Loading 57%A2 - Front Loading 43%

One of 14 Major Brand 

Cluster 01B - Washers 59.0% Names, or Other

A1 - Electric 77%A2 - Gas 23%

One of 14 Major Brand 

Cluster 02B - Dryers 41.0% Names, or Other

Percent of PPercent of P

 In TPOPS Survey dat

In TPOPS Survey, dat

‘point of purchase su

 Categories d d db 

divided by 

commonly carried in 

Stoves and microwav

POPSCAT; washers a

anoth ) er
Percent of POPSCAT Percent of POPSCAT

 CPI receives expense per store per CPI receives expense per store per

popscat per psu

 CPI uses ELI l l hf evel weights from CE, 

concorded by POPSCAT, to determine 

expense per store per ELI per PSU

25

Other considera

Use of CE Use of CE 

 Access to finalized an

Septemb f h f 

ber 1 of the f

year (ex. 2009 expen

required b

 on Septemb

 Continuous rotation o

to coincide with CPI Pto coincide with CPI P

rotation

Production Requirement 

Summary

 Expenditure detail for 303 Entry Level Items Expenditure estimates for 38 geographic Areas 

and 87 PSUs and 87 PSUs

 Monthly expenditure estimates Estimates f b or ur an, wage-earning, and ld l e er y 

populations

 September 1 production deadline Sufficient sample size to maintain variance Sufficient sample size to maintain variance

27

CPI INTERECPI INTERE

REDESIGNED 
Interests for Continued 

Production of the CPI Production of the CPI

 Maintain current level of expenditure Maintain current level of expenditure

detail to the ELI

 Al h lh ign CE geographic sample with C&S 

sample

 Collect information to separate 

purchases by urban, wage-earning, and elderly populations

29

Interests for 

Production oProduction o

 Increase sample 

Increase sample 

 C ll i f 

Collect point of 

 Maintain researc

Reasons for an increased 

sample size

Aggregation Level of 2007‐2008 Expenditure DataItem‐US‐Monthly Item‐Area‐Biennial Item‐Area‐Annual

Item‐Area‐Monthly

C ll e s per Peri do 211 80 81 80 81 80 81Number of Periods 24 1 2 2

Number of Expenditure

Records per Cell by

Percentile

Minimum 0 0 0 0

10% 26 11 5 0

25% 84 34 17 1

Median 50% 212 99 49 5

75% 576 318 157 1690% 2379 1221 611 60

Maximum 5923 24354 12399 1266

Percentage of cells with 0

reports 0.41 1.46 2.58 14.92Percentage of cells withless than 30 reports 11.59 22.26 36.99 83.00

Interests for 

Production oProduction o

 Point of Purchase Da

Point of Purchase Da

Enhanced demographAll h b 

ows weighting by s

item

I tth mportant where wag

at different stores tha

population
Interest in Attributes for 

Research Purposes Research Purposes

 Complete set of expenditures for Complete set of expenditures for

household-level indexes

C ld ll f h h ld di CPI Could allow for a household median CPIAdvantages for alternate indexes

 Current set of demographic data (i.e. 

age, income levels, household size, 

race, occupation, location)

33

Contact Info

William C

Econom

Consumer Pric

www.bls.g 

o

202-691-7

casey.william@