How much have prices risen for consumers? Seven measures

The conventionally used CPI-U is in the middle range.

Figure 1: CPI city (bold black), CPI for wage and salary earners and office workers (purple), CPI for the 2nd income quintile (pink), chained CPI (brown), HICP (light blue), everyday price index (EPI) (green), all not seasonally adjusted and PCE deflator – market based, seasonally adjusted (pink), all in logs 2020M01=0. NBER defined gray-shaded dates from the peak to the trough of the recession. Concatenated CPI, HCP, seasonally adjusted by author using X-13 log transformation. Source: BLS, BEA via FRED, BLS, European Commission via FRED, AIER, NBER and author’s calculations.

The CPI wage and the CPI 2nd quintile are higher, reflecting the fact that prices have risen faster for those at the bottom of the income distribution (the CPI-U reflects a household’s spending behavior at approximately the 70th percentile). Chained CPI is lower because it accounts for substitution effects for broad categories, while CPI-U is quasi-Laspeyres. The HICP differs from the CPI in many ways, but one important difference is that it does not take housing costs into account.

Note that the AIER’s Everyday Price Index (EPI), which includes non-delayable items, is significantly higher than the overall CPI (although it is based on BLS data). Since these expenses are more prominent in consumers’ minds (because they occur more frequently), it would not be surprising if consumers assumed that prices have increased significantly more than indicated in the CPI (this last point is just a guess) . my part).