the hedonic function and the differences between the characteristics bundles supplied by the old and new items.
The selection by a BLS field agent of a new (previously not priced) item because the item previously priced is no longer available at a particular CPI sample outlet. BLS has implemented a set of methods designed for judging pure price change when prices of two non-identical items must be compared. See class-mean method, deletion method, direct comparison, explicit cost-based adjustment, overlap pricing.
The 218 categories of goods and services that represent the lowest level of disaggregation at which CPI subindexes are calculated.
Item weighting (upper level)
The expenditure share assigned to each category of goods and services in an index.
A price index measured as a weighted average of the ratios of individual prices in two periods. Item weights are fixed to reflect expenditure shares in the base period (which for a Laspeyres is the same as the reference period). The denominator is the priced-out fixed bundle established in the base period; the numerator is the same bundle, priced out for a later period.
The period in which new item weights are introduced in an index.
The manner in which individual price quotes are combined by area (or area groups) into separate indexes for some 218 categories of goods, called item strata, the basic building blocks for the CPI.
A change in the proportions of expenditure on goods within a CPI entry-level item category (e.g., Gala apples for Golden Delicious). See consumer substitution.
Medical Care Price Index (MCPI)
An index designated in scope to track changes in the price of (or cost of living associated with) goods and services related to households’ medical care.
Modified Laspeyres index
As used for the CPI, an index in which the fixed bundle (strata weights) is established in a base period that does not typically coincide with the reference period. Information from three (not two) periods enters index calculation.
The process whereby BLS reselects the outlets from which it prices index items.