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October 1998, Vol. 121, No. 10
Incorporating a geometric mean formula into the CPI
Kenneth V. Dalton
Associate Commissioner, Prices and Living Conditions, Bureau of
Labor Statistics
John S. Greenlees
Assistant Commissioner, Consumer Prices and Price Indexes, Bureau of Labor
Statistics
Kenneth J. Stewart
Economist, Division of Consumer Prices and Price Indexes, Bureau of
Labor Statistics
Beginning in January 1999, a new geometric mean formula will replace the
current Laspeyres formula in calculating most basic components of the Consumer Price
Index. The new formula will better account for the economic substitution behavior of
consumers. This article describes an important improvement in the
calculation of the Consumer Price Index (CPI).
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Consumer Price Index
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