What is the Consumer Price Index or CPI?
The Consumer Price Index, or CPI, is a tool that measures the average change of prices in consumer goods and services over a period of time. It measures changes in a “market basket,” in different areas of the country and among various consumer groups. The U.S. Bureau of Labor Statistics maintains several CPIs reflecting different consumer groups. The CPI to which Cost-of-Living Adjustments (COLAs) are tied is the Consumer Price Index for Urban Wage Earners and Clerical Workers known as the CPI-W. Senior advocates are concerned that using the CPI-W to determine COLAs does not accurately reflect the inflation that seniors experience. The CPI-W surveys only the costs experienced by younger workers who generally do not have to spend as much on health care and prescription drugs as seniors do.
