Relative Importance of Components in the Consumer Price Indexes
This page contains links to data on the relative importance of
components in the Consumer Price Index for All Urban Consumers (CPI-U) and
the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W). These data are to be used in conjunction with the CPI-U and CPI-W
released in that same year.
Table 1 contains data for the U.S. city average. Tables 2 through 6
contain data for 27 metropolitan areas, 4 regions, 3 population size
classes, and 10 cross-classifications of area and population size class.
Table 7 presents the relative importance of the individual area all-items
indexes in the U.S. city average all-items indexes.
The relative importance of a component is its expenditure or value
weight expressed as a percentage of all items within an area. When the
value weights are collectedmost recently during the 2003-2004 Consumer
Expenditure Surveythey represent average annual expenditures, and their
relative importance ratios show approximately how the index population
distributes expenditures among the components. Relative importance ratios
represent an estimate of how consumers would distribute their expenditures
as prices change over time.
Relative importance ratios cannot be used as estimates of current
spending patterns or as indicators of changing consumer expenditures in
the intervals between weight revisions because consumption patterns are
influenced by factors other than price change. These factors include
income, variations in climate, family size, and availability of new and
different kinds of goods and services.
Relative importance ratios of components in the national or local area
Consumer Price Indexes can be used in the construction of indexes for
special combinations of items. In such instances, relative importance
ratios are used as weights to combine relative changes in prices of the
selected components over specified periods.
For a description of the procedure for deriving index weights from consumer expenditure data, see
chapter 16, Consumer
Expenditures and Income and chapter 17, The Consumer Price
Index in BLS Handbook
of Methods. BLS publishes the expenditure weight, or "relative importance," of each
component in the CPI once a year, using December data. In fact, relative
importances change every month, reflecting the change in relative prices.
How to Estimate an updated relative importance
To estimate a relative importance for a component for a month (other than December),
one can use its previous published relative importance and update it by
published price changes. For example, suppose one wants to estimate the
relative importance of energy for the CPI-U in Sept. 2005. To answer this,
one needs the published relative importance for energy for December 2004.
One also needs the Dec. 2004 and Sept. 2005 indexes for energy and for all
In this example, one would enter the weights and indexes for these two
item categories (see the first 4 columns). The updated weight column is
the December published weight times the relative change between Dec. 2004
and Sept. 2005.
Specifically, in this example, the updated weight for energy is
7.991 * (208.0/153.7) = 10.8141.
For all items, the updated weight is 100.000 * (198.8/190.3) = 104.4666.
To calculate the updated relative importance for energy where the
weight for all items is normalized to 100, just divide the updated weight
for energy by the updated weight for all items, times 100.
In this example, the estimated relative importance for energy in Sept.
2005 is (10.8141 / 104.4666) X 100 = 10.352.
Table 1. Estimating an updated relative importance for energy for Sept. 2005
||Published relative importance, Dec. 2004
||Index, Dec. 2004
||Index, Sept. 2005
||Updated weight, for Sept. 2005 [Dec. 2004 rel. imp. X (Sept. 2005 index / Dec. 2004 index)]
||Updated weight, Sept. 2005, normalized so that all items = 100.000
||Normalized to 100.000
How to estimate the contribution of a component to the overall price change
Suppose that, in the above example, energy prices increase 1.0 percent in October,
while the All Items index increases 0.2 percent. How does one figure out the
contribution of the Energy component to the All Items change? Asked another way,
what proportion of the All Items increase can be attributed to the Energy component?
The first thing one needs to do is estimate the updated relative importance for Energy for
Sept. 2005 (see Table 1 above, last column). One can then multiply the updated
expenditure weight of Energy times its relative price change in October
(10.352 X 1.01 = 10.456). Similarly, the updated expenditure weight for All Items
is 100 X 1.002 = 100.200.
The change in the expenditure weight for Energy in October is 10.456-10.352=0.104.
The change in the expenditure weight for All Items in October is 100.200-100.00=0.200.
The contribution of energy to the All Items change equals the change in the
expenditure weight for Energy, divided by the change in the expenditure weight for
All Items. Specifically, the contribution of Energy to All Items in this hypothetical
example is 0.104 / 0.200 = 0.52 or 52 percent. Said another way, slightly more than
half the increase in the October index was due to the increase in energy prices.
Table 2. Estimating the contribution of energy to the All items
change in October. 2005
||Normalized/updated weight for Sept. 2005 (from Table 1)
||Price change from Sept. 2005 to Oct. 2005, expressed as a relative
||Updated weight, Oct. 2005 (updated weight X price change)
||Differences in weights
||+ 1.0 percent, or 1.01
||10.456 10.352 = 0.104
||+ 0.2 percent, or 1.002
||100.200 100.000 = 0.200
Contribution of Energy to All Items
||0.104/0.200 = 0.52 =52 percent
Relative Importance of Components in the Consumer Price Index
- December 2013
- Table 1, U.S. City Average using 2011-2012 weights (TXT)
- Table 1, U.S. City Average using 2009-2010 weights (PDF)
- Tables 1 - 7, Relative Importance of Components in the Consumer
Price Index, all areas (PDF)