pared with the official CPIs, it is important to 

note that the CPI-E is an experimental index, 

so any conclusions drawn from it should be 

used with caution. There are several reasons 

that the CPI-E is considered an experimental 

index.

First, the scope of the CPI-E is significantly 

narrower than that of the CPI-U: in 2009–2010, 

approximately 24 percent of all consumer 

units met the CPI-E’s definition of having a 

reference person or spouse 62 years of age or 

older. As a result, because the CPI-E sample is 

relatively small, the expenditure weights used 

for that index are subject to a larger sampling 

error than those used for the official indexes.

Second, the geographic areas, and the retail 

outlets within those areas, used for the CPIE are the same as those used for the CPI-U. 

Retail outlets are selected for pricing in the 

CPI-U on the basis of data reported in a survey 

representing all urban households. The CPI-E 

uses that same retail outlet sample. Thus, the 

outlets may not be representative of the location and types of stores used by the elderly 

population.

Third, the sample of items used for the CPI-E is 

the same sample used for the official indexes. 

Because the specific items sampled within 

selected outlets are chosen on the basis of 

total sales in the outlet—and not sales to the 

elderly—the items selected for pricing in each 

The Bureau of Labor Statistics (BLS) calculates official price indexes for two population 

groups. One is the Consumer Price Index for 

All Urban Consumers (CPI-U), which represents the spending habits of about 88 percent 

of the population of the United States.1 The 

other is the CPI for Urban Wage Earners and 

Clerical Workers (CPI-W), a subset of the CPI-U 

population, which represents about 29 percent of the U.S. population.

BLS also calculates an experimental Consumer 

Price Index by using households whose reference person or spouse is 62 years of age or 

older. Commonly called the CPI for the elderly, 

or CPI-E, this experimental price index rose 

142.8 percent from December 1982 to December 2011, compared with increases of 131.2 

percent and 126.7 percent for the CPI-U and 

CPI-W, respectively. These figures translate into 

average annual increases of 3.1 percent for the 

CPI-E and 2.9 percent for both the CPI-U and 

CPI-W.2

Methodology and limitations of the CPI-E

Although the CPI-E indicates a slightly higher 

overall inflation rate for older Americans comCurrent Price Topics

The Experimental 

Consumer Price Index

for Older Americans

1

Consumer Price Index: Fourth Quarter 2011

U.S. Bureau of Labor Statistics February 2012 Volume 2, Number 15
2

outlet may not be representative of the CPI-E 

population. For example, the CPI sample for 

prescription drugs in a pharmacy is designed 

to be representative of all prescriptions drugs 

sold at that pharmacy, whereas a sample 

designed to represent prescription drug purchases by the elderly would likely include a 

different range of those items.

Finally, the prices used in the CPI-E are the 

same as those used for the official indexes. 

For example, senior-citizen discount rates are 

used in the CPI only in proportion to their use 

by the urban population as a whole. These 

prices, presumably, would be more widespread in an index designed specifically for 

older Americans.

Relative behavior of price indexes

From December 1982 through December 

2011, the all-items CPI-E rose at an annual 

average rate of 3.1 percent, compared with 

increases of 2.9 percent for both the CPI-U and 

CPI-W. There are several reasons that older 

Americans faced slightly higher inflation rates 

over the past 29 years. First, older Americans 

devote a substantially larger share of their 

total budgets to medical care. For example, as 

shown in table 1, the share of expenditures on 

medical care by the CPI-E population is roughly double that of either the CPI-U population 

or the CPI-W population. In addition, over 

the 1983–2011 period, medical care inflation 

increased significantly more than inflation for 

most other goods and services (5.1 percent 

annually for medical care, compared with 2.8 

percent for all items less medical care). In fact, 

medical care inflation has outpaced overall 

inflation in each of the last 29 years, save for 

1996.

Second, older Americans spend relatively 

more on shelter (see table 1), and during the 

last 29 years shelter costs have modestly outpaced overall inflation. Thus, the medical care 

 CURRENT PRICE TOPICS

Table 1. CPI relative importance, by population,

selected expenditure groups, December 2011

(based on 2009–2010 Consumer Expenditure

Survey data)

Expenditure group CPI-U CPI-W CPI-E

All items 100 100 100

Food and beverages 15 15.7 12.8

Food at home 8.5 9.3 7.9

Food away from home 5.6 5.5 4.2

Alcoholic beverages 0.9 0.9 0.7

Housing 40.2 39.2 44.5

Shelter 30.9 30 34.3

Rent of primary residence 6.4 8.8 3.8

Owners' equivalent rent 23.5 20.5 29.3

Apparel 3.5 3.6 2.4

Transportation 16.5 18.7 14.5

Motor fuel 5.4 6.9 4.1

Medical care 6.9 5.6 11.3

Medical care commodities 1.7 1.3 3

Medical care services 5.2 4.3 8.3

Recreation 5.9 5.5 5.3

Education and communication 6.7 6.7 3.8

College tuition and fees 1.7 1.4 0.4

Other goods and services 5.3 5.1 5.4

Tobacco and smoking products 0.8 1.2 0.6
3

and shelter components account for a significant portion of the difference between the 

higher rate of increase measured for the CPI-E 

relative to the two official indexes during the 

1983–2011 period.

Although the CPI-E generally outpaced the 

official measures of inflation over the 1983–

2011 timeframe, recent trends show different 

results. From 2006 to 2011, both the all-items 

CPI-E and the CPI-U rose at an average annual 

rate of 2.3 percent, while the CPI-W increased 

2.4 percent. This turnaround was caused 

primarily by changes in the relative inflation 

rates of medical care and shelter, compared 

with the overall inflation rate. Specifically, the 

gap between medical care inflation and overall inflation has generally fallen since 2005, 

and shelter inflation has been rising slightly 

more slowly than overall inflation over the 

2006–2011 period.

The CPI and its relationship to Social Security benefits

The Social Security Administration uses 

changes in the CPI-W to determine annual 

cost-of-living adjustments (COLAs) for beneficiaries. Some policymakers have advocated 

using the CPI-E instead, arguing that the CPIW (which represents the spending patterns of 

wage-earner and clerical workers) excludes 

the experience of families whose primary 

source of income is from retirement pensions.

That said, it is important to note that the CPI-E 

population and those receiving Social Security 

benefits are not identical. First, the population covered by the CPI-E includes persons 62 

years of age and older. Many Social Security 

beneficiaries, however, are younger than 62 

and receive benefits because they are surviving spouses or minor children of covered 

workers or because of disability. The spending 

patterns of this younger group are excluded 

in determining the expenditure weights for 

the CPI-E. Second, a substantial number of 

persons 62 years of age and older—especially 

those 62 to 64 years old—do not receive 

Social Security benefits at all. Although these 

older consumers are included in the CPI-E 

population, many of them likely would be 

excluded from an index defined expressly

to reflect the experience of Social Security 

pensioners.

In short, an index designed specifically to 

measure price change for Social Security beneficiaries (i.e., one that excludes older people 

who are not receiving benefits, but includes 

younger persons receiving survivor and disability benefits) might show price movements 

that differ somewhat from those captured by 

the CPI-E.

Conclusions

For most of the period since 1982, the CPI-E 

rose, on average, somewhat more than the 

CPI-U and the CPI-W. In recent years, however, that has not been the case. Because the 

medical care and shelter components of the 

CPI have a substantially larger relative weight 

 CURRENT PRICE TOPICS
in the energy index during the last 3 months 

of 2011. The energy index decreased at a 

seasonally adjusted annualized rate of 18.0 

percent during the fourth quarter. By contrast, 

the food index increased 1.6 percent on a 

seasonally adjusted annualized basis. Excluding food and energy, the CPI-U increased at 

a seasonally adjusted annualized rate of 1.8 

percent during the fourth quarter of 2011. 

(See chart 1.)

Energy

Price movements in the energy index remained volatile during the last quarter of 

2011. The energy index decreased at a seasonally adjusted annualized rate of 18.0 percent 

during the fourth quarter, following an increase of 26.6 percent in the third quarter of 

2011. Annually, the index increased 6.6 percent from December 2010 to December 2011. 

The 5-year annualized change in the energy 

index from December 2006 to December 2011 

was 4.6 percent.

The marked decrease in the energy index was 

due to large fourth-quarter decreases in the 

indexes for utility (piped) gas service and gasoline (all types), which decreased at seasonally 

adjusted annualized rates of 28.3 percent and 

26.2 percent, respectively. In contrast, two 

components of the energy index—fuel oil and 

other fuels (which is not seasonally adjusted) 

and electricity—increased at annualized rates 

of 7.1 percent and 2.3 percent, respectively, 

during the fourth quarter of 2011.

in the experimental CPI-E compared with the 

CPI-U or CPI-W, these items tend to have a 

greater effect on the elderly population than 

on the populations covered by the CPI-U and 

CPI-W.

Some policymakers have argued that, because the CPI-W excludes the experience of 

families whose primary source of income is 

from retirement pensions, the CPI-E is a more 

appropriate measure of changes in the cost 

of living for pensioners. Still, the experimental CPI-E has limitations as an estimate of the 

inflation rate experienced by older Americans, 

and any conclusions drawn from it should be 

used with caution.

All items

The U.S. all items Consumer Price Index for 

all Urban Consumers (CPI-U) decreased at a 

seasonally adjusted annualized rate of 0.4 percent during the fourth quarter of 2011. This 

drop follows successive increases in the all 

items CPI-U for the previous three quarters of 

2011. The all items CPI-U rose 3.0 percent from 

December 2010 to December 2011. The 5-year 

annualized change in this index from December 2006 to December 2011 was 2.3 percent.

The fourth-quarter decrease in the all items 

CPI-U is attributed largely to a sharp decrease 

4

 CURRENT PRICE TRENDS

Current Price Trends
Changes in the energy index are explained 

chiefly by similar price movements in the gasoline (all types) index, which exhibited marked 

reversals in price movements between each 

quarter of 2011. Despite decreasing on a seasonally adjusted annualized basis during the 

fourth quarter, the gasoline (all types) index 

increased 9.9 percent from December 2010 

to December 2011. The 5-year annualized 

change in this index from December 2006 to 

December 2011 was 7.2 percent.

Also of note is the continued decrease in the 

utility (piped) gas service index. Although the 

index exhibited three successive quarters of 

seasonally adjusted annualized increases prior 

to the fourth-quarter decrease, it decreased 

3.7 percent from December 2010 to December 2011. Likewise, the 5-year annualized 

change in this index from December 2006 to 

December 2011 was a decrease of 4.2 percent.

Food

Increases in the food CPI-U slowed to a seasonally adjusted annualized rate of 1.6 percent during the fourth quarter of 2011, after 

increasing at a seasonally adjusted annualized rate of 5.8 percent for the first 9 months 

of 2011. From December 2010 to December 

2011, the index increased 4.7 percent. The 

5-year annualized change in the food index 

from December 2006 to December 2011 was 

3.3 percent.

5

 CURRENT PRICE TRENDS

6.1 7.5

42.4

1.5 2.0 4.1

-12.5

2.9 4.8 5.7

26.6

2.1

-0.4

1.6

-18.0

1.8

-30

-20

-10

0

10

20

30

40

50

All items Food Energy All items less food and 

energy

1st quarter change, 2011

2nd quarter change, 2011

3rd quarter change, 2011

4th quarter change, 2011

Chart 1. CPI-U quarterly percent changes, 2011

SOURCE:U.S. Bureau of Labor Statistics

Percent change
The food at home component increased at 

a seasonally adjusted annualized rate of 0.9 

percent during the last 3 months of 2011. This 

moderate quarterly increase was not due to 

uniformly moderate changes in the subcategories of the index, but is rather explained by 

offsetting quarterly price movements in these 

subcategories. For example, the meats, poultry, fish, and eggs component increased at a 

seasonally adjusted rate of 4.5 percent. Both 

the cereal and bakery products index and the 

nonalcoholic beverages and beverage materials index increased at a seasonally adjusted 

annualized rate of 4.0 percent, and the other 

food at home index increased at a seasonally 

adjusted annualized rate of 2.8 percent. In 

contrast, the quarterly decreases in the fruits 

and vegetables and dairy and related products

indexes, which declined at seasonally adjusted annualized rates of 10.8 percent and 1.7 

percent, provided the resulting offset for the 

food at home component.

Within the dairy and related products index, 

the milk index moved from successive doubledigit increases for each of the first three quarters of 2011 to a seasonally adjusted annualized decrease of 6.0 percent during the fourth 

quarter. This was the first quarterly decrease in 

the milk index since the third quarter of 2009.

By contrast, the coffee index, which is a component of the nonalcoholic beverages and 

beverage materials index, continued the 

trend of quarterly price increases. The index 

increased 12.5 percent during the fourth 

quarter of 2011, on a seasonally adjusted annualized basis. The last quarterly decrease in 

the coffee index occurred during the second 

quarter of 2010.

The food away from home index, which is not 

seasonally adjusted, increased 2.4 percent on 

an annualized basis during the fourth quarter of 2011. This rise follows an annualized 

increase of 3.1 percent for the first 9 months 

of 2011. The 5-year annualized change in the 

food away from home index from December 

2006 to December 2011 was 3.0 percent.

All items less food and energy

The all items less food and energy CPI-U 

increased at a seasonally adjusted annualized 

rate of 1.8 percent during the fourth quarter 

of 2011, the same as its 5-year trend from 

December 2006 to December 2011. After 

the 12-month change in this index reached 

a historic low of 0.6 percent in October 2010, 

the annual rate of change in the index slowly 

increased to 2.2 percent in December 2011. 

(See chart 2.)

The housing index increased 1.4 percent on a 

seasonally adjusted annualized basis during 

the fourth quarter of 2011, with the shelter

component increasing an annualized 2.1 percent over the same period. 

Price movements in the rent of primary residence index continued to accelerate during 

the fourth quarter of 2011, rising at a seasonally adjusted annualized rate of 3.5 percent, 

6

 CURRENT PRICE TRENDS
 CURRENT PRICE TRENDS

following an annualized increase of 2.1 percent 

during the first 9 months of the year. The tenants’ and household insurance index, which is 

not seasonally adjusted, also accelerated during the last quarter of the year, increasing at an 

annualized rate of 5.0 percent; this rise follows 

a 9-month annualized increase of 1.8 percent 

ending in September 2010.

Price movements in the owners’ equivalent 

rent of primary residence index slowed to 

a seasonally adjusted annualized quarterly 

increase of 2.1 percent during the fourth quarter of 2011, from 2.4 percent during the third 

quarter, but remained above the seasonally 

adjusted annualized rate of 1.6 percent for the 

first 9 months of the year.

7

In contrast to the quarterly price increases in 

the aforementioned shelter components, the 

lodging away from home component of the 

shelter index decreased at a seasonally adjusted annualized rate of 7.8 percent during 

the fourth quarter of 2011. The index has now 

decreased for two consecutive quarters.

The transportation index decreased 10.2 percent on a seasonally adjusted annualized basis 

during the fourth quarter of 2011. This quarterly decrease is explained by price movements in the new and used motor vehicles

and motor fuel components of the index, both 

of which also showed fourth-quarter decreases. The motor fuel index, which is greatly 

influenced by gasoline price movements, 

-3

-2

-1

0

1

2

3

4

5

6

Jan

2006

Jul

2006

Jan

2007

Jul

2007

Jan

2008

Jul

2008

Jan

2009

Jul

2009

Jan

2010

Jul

2010

Jan

2011

Jul

2011

All items

All items less food and energy

Chart 2. CPI-U 12-month percent changes, January 2006–December 2011

Percent change

SOURCE:U.S. Bureau of Labor Statistics
8

 CURRENT PRICE TRENDS

decreased at a seasonally adjusted annual rate 

of 26.1 percent. The new and used motor vehicles index decreased 4.5 percent during the 

quarter on a seasonally adjusted annualized 

basis. All components of this index exhibited 

fourth-quarter decreases, except for the car 

and truck rental index.

The medical care index increased at a seasonally adjusted annualized rate of 5.1 percent 

during the fourth quarter of 2011. All components of the index exhibited fourth-quarter 

increases, except for the eyeglasses and eye 

care index, which decreased 4.5 percent on a 

seasonally adjusted annualized basis. Medical 

care services increased at a seasonally adjusted annualized rate of 5.9 percent during 

the fourth quarter. Year to year, this index rose 

3.6 percent from December 2010 to December 2011, and an annualized 3.8 percent from 

December 2006 to December 2011.

The apparel index showed three consecutive quarters of price increases, the last of 

which, during the fourth quarter of 2011, was 

a seasonally adjusted annualized rate of 3.7 

percent. The rate of increase, however, has 

slowed in each successive quarter since the 

second quarter of 2011. The men’s, women’s, 

and girls apparel indexes and the infants’ and 

toddlers’ apparel index also had three consecutive quarters of price increases. By contrast, the boys’ apparel index and the footwear

index decreased during the fourth quarter, 

after registering three consecutive quarterly 

increases in 2011. The jewelry and watches

index rose in each quarter of the year.

The recreation index increased during the 

fourth quarter of 2011 at a seasonally adjusted annualized rate of 1.8 percent. Of note, 

however, is the continued decline in price 

movements of the televisions index, which 

decreased at a seasonally adjusted annualized 

rate of 13.0 percent. Annually, the televisions

index decreased 17.1 percent from December 

2010 to December 2011. The 5-year annualized decrease in the index from December 

2006 to December 2011 was 20.4 percent.

Likewise, personal computers and peripheral 

equipment, a component of the communication index, continued decreasing during the 

fourth quarter of 2011, at a seasonally adjusted annualized rate of 9.9 percent. The index 

decreased by 12.5 percent from December 

2010 to December 2011, whereas the 5-year 

annualized decrease from December 2006 to 

December 2011 was 11.1 percent.

The communication index had a quarterly decrease of 0.2 percent, in stark contrast to the 

education index, which increased 4.8 percent 

during the fourth quarter of 2011. In the aggregate, the education and communication index rose 2.2 percent during the last 3 months 

of 2011. Each quarterly price change was at a 

seasonally adjusted annualized rate.

Quarterly increases in the other goods and 

services index slowed to a seasonally adjusted 
9

 CURRENT PRICE TRENDS

annualized rate of 2.5 percent during the 

fourth quarter of 2011, following a quarterly 

rise of 2.9 percent during the third quarter.

Conclusion

In sum, 5 of the 8 major U.S. CPI-U index 

groups exhibited slower rates of growth, with 

the transportation index actually decreasing, 

during the fourth quarter of 2011, compared 

with the third quarter. The seasonally adjusted 

Notes

1 The Chained CPI for All Urban Consumers (C-CPI-U), which BLS began publishing in August 2002, with data back to January 

2000, also represents the urban population. The prices used in the C-CPI-U are the same as those used to produce the CPI-U, but the 

C-CPI-U uses a different formula and different weights to combine basic indexes.

2 For more comparisons of the CPI-E, CPI-U, and CPI-W, see Kenneth J. Stewart, “The experimental consumer price index for 

elderly Americans (CPI-E): 1982–2007,” Monthly Labor Review, April 2008, pp. 19–24, http://www.bls.gov/opub/mlr/2008/04/

art2full.pdf.

annualized quarterly decrease of 0.4 percent 

in the all items index was due largely to the 

significant quarterly decrease in the energy

index; excluding energy, the all items less energy index increased at a seasonally adjusted 

annualized rate of 1.8 percent during the 

fourth quarter.

For more information, contact Darren Rippy at 

(202) 691-5377 or email: rippy.darren@bls.gov.