4 Facts You Probably Haven't Considered About Inflation Data

2. The CEX and CPI data differ in several important ways.

The price data underlying the new CRR analysis comes from both the CPI-U and the Bureau of Labor Statistics’ Consumer Expenditure Survey, or CEX.

As Munnell and Horvath explain, the CPI-U is the most commonly used measure of inflation. It estimates average price changes faced by urban consumers for a market basket of goods and services, covering about 93% of the U.S. population and based on eight major sub-indexes.

In June, Munnell and Horvath report, the sub-indexes with the largest 12-month price increases were transportation, food/beverages and housing. These categories experienced inflation rates of about 20%, 10% and 7%, respectively. In contrast, education and communication experienced the lowest rate of inflation, around 1%.

For its part, the CEX measure includes self-reported information on U.S. after-tax consumer expenditures by household income and demographic characteristics for the U.S. civilian population. CEX data are integrated from two surveys, the CRR report notes.

The first is an interview survey that considers large expenses such as property and rent, and the second is a diary survey for smaller and frequently purchased items, such as food and beverages.

Munnell and Horvath point out that CEX data are routinely used to weight the relative importance of goods and services and adjust market baskets that make up CPI indexes.

“Interestingly, the CEX expenditure categories include contributions to Social Security and retirement plans, as well as outlays for life insurance and personal cash contributions,” Munnell and Horvath write. “These items are not included in any of the CPI categories.”

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