July 7, 1999 (The Editor’s Desk is updated each business day.)
Housing prices usually restrained
in CPI research series
In a new CPI research series, prices of housing increased at
a slower pace than in the official CPI in most, but not all, of the years in the 1978-98
study period. During 15 of the 21 years, housing inflation was lower in the research
series than in the official index, with the biggest reductions occurring at the beginning
of the period.
[Chart data—TXT]
Between 1978 and 1980, housing prices in the research series grew much more slowly than
in the official Consumer Price Index. The downward adjustment in 1979 was the largest, at
5.7 percentage points. The discrepancies between the two series of housing prices in the
late 1970s and early 1980s were due primarily to the incorporation in the research series
of the "rental equivalence" method. With this method, the homeownership
component of the CPI is based on a flow-of-services approach rather than on the current
cost of the purchase of a home; rental equivalence was first included in the official CPI
in 1983.
Housing inflation was actually higher in the research series in five consecutive years
during the 1980s. However, most of these differences were small except for 1982, when the
rate of housing inflation in the research series was 3.1 percentage point above the
official rate. Also, there was only one year in the entire study period in which there was
no difference between the two series: 1998.
The BLS Consumer Price Index program produces CPI data. 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. Find more information on the CPI research series in "CPI research series using current methods,
1978-98," by Kenneth J. Stewart and Stephen B. Reed, Monthly Labor Review
preprint, June 1999. It is important to note that the CPI research series has certain
limitations and that it is subject to revision. Annual percent changes are
December-to-December changes.
Of interest
Spotlight on Statistics: National Hispanic Heritage Month
In this Spotlight, we take a look at the Hispanic labor force—including labor force participation, employment and unemployment, educational attainment, geographic location, country of birth, earnings, consumer expenditures, time use, workplace injuries, and employment projections.
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Read more »