June 21, 1999 (The Editor’s Desk is updated each business day.)

New research series shows lower inflation

Using current methods of calculation, the Consumer Price Index for All Urban Consumers (CPI-U) would have grown more slowly in the past 20 years. The average rate of inflation based on a new research series was about half a percentage point lower than the official rate in 1978-98.

[Chart data—TXT]

In a new BLS study, the CPI-U was re-computed for 1978-98 using the latest methods. The resulting research series, dubbed the CPI-U-RS, rose by 4.28 percent per year on average over that period, compared with 4.73 percent for the CPI-U. As shown in the chart, in every year except 1982, the CPI-U increased by more than the research series.

BLS has made numerous improvements to the CPI over the years, which have increased the accuracy of the index; however, the official historical price indexes are not adjusted to reflect the improvements. The research series attempts to answer the question: "What would have been the measured rate of inflation from 1978 forward had the methods currently used in calculating the CPI-U been in use since 1978?"

CPI data are produced by the BLS Consumer Price Index program. It is important to note that the CPI-U-RS has certain limitations and that it is subject to revision. More information on the CPI-U-RS can be found in "CPI research series using current methods, 1978-98," by Kenneth J. Stewart and Stephen B. Reed, Monthly Labor Review preprint, June 1999. Annual percent changes are December-to-December changes.