The Consumer Price Index (CPI) is a measure of the average change over time in prices paid by urban consumers for a market basket of goods and services. The CPI-U is the most commonly used measure, while the CPI-W is used to calculate cost-of-living adjustments for Social Security benefits. In this post, we will explore the difference between these two measures.
What is CPI-U?
CPI-U refers to the Consumer Price Index for Urban Consumers. It is a measure of the average change in prices paid by consumers for a basket of goods and services. CPI-U is used for inflation and is considered a key indicator of the health of the economy. The CPI-U is calculated by the Bureau of Labor Statistics on a monthly basis and is released to the public on a lag of about two months. CPI-U is used by economists, businesses, and governments to make decisions about inflation, interest rates, and other economic policies.
What is CPI-W?
CPI-W is the Consumer Price Index for Urban Wage Earners and Clerical Workers. It measures changes in the prices paid by these urban consumers for a market basket of goods and services. The CPI-W market basket includes items such as food, housing, transportation, medical care, recreation, and education. The CPI-W is used to adjust Social Security benefits and to calculate cost-of-living allowances for federal government retirees.
The CPI-W is also used to adjust the income thresholds for eligibility for certain government programs. For example, the poverty thresholds used to determine eligibility for Medicaid and the Supplemental Nutrition Assistance Program (SNAP) are based on the CPI-W. CPI-Ws are released on a monthly basis by the U.S. Bureau of Labor Statistics.
Difference between CPI-U and CPI-W
CPI-U stands for “Consumer Price Index for Urban Consumers” and CPI-W stands for “Consumer Price Index for Urban Wage Earners and Clerical Workers”. The CPI-U covers a broader geographic area than CPI-W. CPI-U also covers a wider variety of items than CPI-W. CPI-W is more focused on urban wage earners and clerical workers. CPI-W is used to adjust social security payments. CPI-U is used to adjust other government benefits. CPI-U is also used as an indicator of inflation. CPI-W is less commonly used than CPI-U.
Conclusion
The Consumer Price Index (CPI) is a measure of the average change over time in prices paid by urban consumers for a market basket of consumer goods and services. The CPI-U measures changes in prices for all items, while the CPI-W measures only price changes for workers’ consumption. The Bureau of Labor Statistics publishes both indexes every month. In this blog post, we have looked at the difference between CPI-U and CPI-W.
