The Consumer Price Index (CPI) is a widely used and often misunderstood statistic. It is commonly called the cost of living index, but it is usually not what people want when they are looking for cost of living information.
The Consumer Price Index measures change over time in the prices of various commodities and services typically purchased by urban consumers. The percentage change between years is the rate of inflation. It is computed by the U.S. Bureau of Labor Statistics for the United States as a whole and for selected urban areas.
In the state of Hawaii, the CPI is done for Honolulu only. There is no CPI for any of the other cities, islands or counties. The figure for Honolulu is released twice a year by the U.S. Bureau of Labor Statistics. The first half covers from January through June and is released in August. The second half is from July through December and there is an annual average. These numbers are released in February
The tables below shows the Honolulu CPI-U, (All Items) and the percentage change. The base year is 1982-84=100.
| INDEX POINT AND PERCENT CHANGES
You will notice that the table above refers to the CPI-U. There is also a CPI-W. Each represents a specific population group. The CPI for All Urban Consumers (CPI-U) covers approximately 80 percent of the population and includes professional, managerial and technical workers, the self-employed, the unemployed, retirees, wage and clerical workers. The CPI-W covers 32 percent of the population and represents wage earners and clerical workers only. CPI percentage changes are often used to compute leases and wage increases and whether you use the CPI-U or the CPI-W is written into the contract.
Another way of understanding the CPI is to note that the indexes measure price change from a designated reference date, 1982-84, which equals 100.0. An increase of 7 percent from the reference date, for example, is shown as 107.0. This change can also be expressed in dollars as follows: The price of a base period “market basket” of goods and services in the CPI has risen from $100 in 1982-84 to $107.
The figure most commonly used is the CPI-U (All Items) but the index is also presented in a detailed format. Some of the categories are food and beverages, housing, fuel and other utilities, apparel and upkeep, transportation, medical care and entertainment.
This information is useful because you may be interested in tracking inflation for a specific good or service, such as medical costs. It also shows that the rate of inflation for specific goods and services may be moving at odds to the overall rate of inflation.
You calculate the percentage change for the Consumer Price Index in the following manner:
| INDEX POINT CHANGE
|Less previous index||108.5|
|Equals index point change||4.0|
| PERCENT CHANGE
|Index point difference||4.0|
|Divided by the previous index||108.5|
|Results multiplied by 100||0.037 x 100|
|Equals percent change||3.7|