THE DON JONES INDEX…

GAINS POSTED in GREEN

LOSSES POSTED in RED

   4/30/14…  15,101.59

   4/23/14…  15,101.59

   6/27/13…  15,000.00

 

(THE DOW JONES INDEX:   4/30… 16,562.74; 4/23… 16,501.65; 11/19/12… 12,592.22)

   

LESSON for APRIL 30, 2014

The Consumer Price Index (Don Jones Indices April 9th, 16th and 23rd) contains nearly three hundred categories, sub-categories, sub-sub and sub-sub-sub-categories of marketable foodstuffs, fuels, homes, services and other commodities ranging from haircuts to bananas and, to keep matters in perspective, assigns to each… as well as to each of the larger categories… an Importancy Index, one presumably designed to allow the consumer to follow the markets (just as he or she might follow the Dow, or a favorite baseball team) and either rejoice or take umbrage at the performance of some favored item.

With a total compilation aggregate of 100.000, the individual Importancy Indices of the two main categories are…

Services  -  61.058

Commodities  -  38.942

 

Within these two, the most Important sub-categories are…

 

Shelter… including rents, owners’ equivalent rents (inc. mortgages), fuels and furnishings -  41.448

Transportation… including private (vehicle costs & repairs and gasoline) and public  -  16.416

Food… including beverages, alcohol (but not tobacco) and restaurant dining -  14.901

Medical Care… commodities (1.704) professional services (doctors, dentists, hospitals - 5.847) -  7.551

Education & Communication… tuition, schoolbooks, telephones, computers  - 7.087

Recreation… including audio & video hardware/software, pets, toys - 5.793

Apparel… including men’s, boys, women’s, girls and infants’ clothing, shoes -  3.437, and

Other… including personal care products, tobacco -  3.365

 

The mathematically-inclined  nitpickers will quickly point out that the Importancy Index still shows a deficit of .272… perhaps this fraction having been absorbed into some black ops non-category like Area 51 or determining the whereabouts of Jimmy Hoffa.  The more ideological nitpicker will address the glaring lack of consideration for government expenditures (drivers’ license and auto tag fees aside) in such categories as taxes, corruption or the ever-present “stupid tax” which Don Jones pays whenever he does something stupid.  Or maybe the problem is just that Importancy, like the dollar, just ain’t what it used to be.  (And, in fact, it would be nice if the value of the dollar had declined by only about a quarter of a percent per year.)

The pure, demonic genius of the CPI lies, however, in its assigning Importancy to the sub-sub and lower categories… as if America was a unified whole of one-mind consumers.  Thus, Don’s haircuts (a sub-category of personal care in the catch-all Other) have an Importancy Index of .633.  Of course, in the case of Hollywood actors and politicians like John Edwards, both cost and Importancy would be higher, but we must allow for those exceptions and exemptions that prove the rule.  There are a few regional variations noted by the BLS and CPI… highest prices are in the Northeast, followed by the West, South and, cheapest, Midwest… and variations are noted montly among three major metropolitan centers (New York, Los Angeles, Chicago) and eleven more (bimonthly).

The Dons of New York and Boston appear to be running neck and neck towards the cliffs of bankruptcy by paying the highest prices in the U.S.A.  Those in Houston get the most for their money… followed by those in Detroit and Atlanta.

Bananas, now… a subcategory of Fresh Fruits (I.I. of .560 of Don’s dollar), which is a subcategory of Fresh Fruits and Vegetables (I.I. 1.042), itself a subcategory of Fruits and Vegetables (I.I. 1.346… the difference being attributed to canned, dried and otherwise processed produce)… have an Importancy Index of .088 (three one-hundred-thousandths more important than apples, but one one-hundred-thousandth inferior to tomatoes).  Theoretically, they would have to be a sub-sub-sub-sub-category of Foods, a five-sub subordinate to Commodities and a six-sub slice of the whole, but who cares anymore?  Let’s just say that Don Jones likes his bananas, perhaps because they have no bones.

You see… we, frankly, do not get the Importancy Index.  The Don Jones Index does assign value to categories (some of which are similar or even identical to those in the CPI and/or the Bureau of Labor Statistics), but we also include what might be termed “intangibles”… things like crime and the environment and the one great milk carton baby of the CPI: government.  Not only in cost, in effectiveness… as measured in the national honor, in trade policy, in fiscal responsibility.

By whom, and how, is the Importancy Index compiled?

In actuality, CPI’s terminology for said categories is Relative Importance (RI).  From http://www.bls.gov/cpi/cpiriar.htm ... “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 collected—most recently during the 2003-2004 Consumer Expenditure Survey—they 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 change from year to year… those which see marked increases in the CPI see the II (or RI) go up; items whose prices are stagnant or deflated lose value.

Of all categories, sub-categories and so on down the line, that with the greatest Importancy Index ranking is “owners’ equivalent rent” which is largely composed of homeowners’ mortgages.  Following are food… all categories and all cuisines… motor fuel (gasoline) and cars, trucks and SUVs themselves, tuitions and childcare expenses, medical care and all non-motor fuels (gas, electricity, even firewood).

What are the least important products that Don Jones opens his wallet to buy?

That distinction belongs to “nonfrozen, noncarbonated drinks and juices” – in other words, your typical cardboard box of Minute Maid, or a house-brand generic from your local grocery (a, below)… measuring .014 (unless you’ve caught a cold, and then, substantially higher).  Rugs and dishes are the least important component items of Shelter, watches of Apparel (coincidentally, the Importancy of women’s clothing is nearly twice that of men’s) tailoring services are Unimportant and delivery services rank as low as the frozen OJ.  Video hardware sits at the bottom of the Recreational category, just beneath… the horror, the horror in River City!... musical instruments.

Turning to inflation… only slightly over eight years’ worth… the CPI of Services and Commodities categories has been 17.1 percent but, taken yearly, just a little north of 2% per year.  Those Don Jones who were of age in the 1970’s would certainly agree… inflation has been whipped.  Fears that Obamite “stimulus” programs would spin us off into an Argentine-like crisis, or that the Fed’s bond-buying spree would do likewise have proven unfounded.  (Their efficacy is quite another matter, but will be taken up at another time.)  It has never been so apparent that whatever problems America faces, these days, they are supply-side ills… there are plenty of consumables out there on the demand side and, with a few exceptions, most are reasonably priced (thanks, in part, to the cheap Asian imports).  The problem is supply side… Don Jones (at least the 99% of Dons) just doesn’t make enough money to satisfy his demands.  Even the more outrageous sub-categories… medical care and the “other” commodities (driven by tobacco prices, legal and financial fees and the cost of funerals) have been out of control for many years, well before 2006.

By category, the rise in CPI has shown these sub-category items to all have become more expensive by one to about one and one half percent per year since 2005 (even medical care, which was, even then, on the way up…

 

CATEGORY

(1982-4 = 100)

December, 2005

March, 2014

Inflation

(8¼ year period)

All Items

201.800

236.293

+ 1.42%

Shelter, Fuels and Furnishings

204.800

231.968

+ 1.37%

Transportation (inc. gasoline)

175.400

218.435

+ 1.51%

Foods and Beverages

197.400

240.226

+ 1.48%

Medical and hospital care

340.100

433.369

+ 1.54%

Education & Communication

118.000

137.125

+ 1.41%

Recreation (inc. pets)

110.800

115.763

+ 1.27%

Apparel (inc. footwear)

118.600

128.888

+ 1.32%

Other

326.700

406.715

+ 1.51%

 

As you see, the price of every category has gone up… sometimes modestly, sometimes barely… but calmly and predictably, between one and a quarter and one and a half percent.  (Rather like the interest rates on John’s CDs… if he’s stupid enough or scared enough to still have any!)  However, there are always the anomalies… individual sub-categoryitems whose prices have either soared or crashed… and here are a few of these, beginning with the cheaper…

 

ITEM

(1982-4 = 100)

December, 2005

March, 2014

Value Deflation

(8¼ year period)

Value Deflation

(30 year period)

All Items

201.800

236.293

+ 1.42%

Televisions

18.800

  4.194

-  77.69%

-  95.81%

Other vid. hardware

25.300

11.013

-  56.47%

-  89.99%

Photographic eqpt.

45.500

24.453

-  46.26%

-  75.55%

Telephone hardware

40.300

28.597

-  29.04%

-  71.40%

Computer software

54.200

36.726

-  32.24%

-  63.29%

Toys

72.700

49.075

-  32.50%

-  50.92%

Clocks and lamps

77.600

49.652

-  36.02%

-  50.35%

Personal computers

115.800

50.477

-  56.41%

-  49.52%

Dishes & flatware

74.200

57.980

-  21.86%

-  42.02%

Ship fares

71.300

61.920

-  13.16%

-  38.08%

Men’s shirts/sweaters

87.800

81.748

-   7.20%

-  18.25%

Appliances

88.000

84.945

-   3.47%

-  15.06%

Women’s suits (a)

87.600

89.835

+   2.55%

-  10.16%

Juices & drinks (a)

110.700

115.659

+   4.48%

+  15.66%

 

And the dearer (the last named excepted)…

 

 

ITEM

(1982-4 = 100)

December, 2005

March, 2014

Inflation

(8 year period)

Inflation

(30 year period)

All Items

201.800

236.293

+ 17.09%

(+1.42% per year(g))

      + 136.29% About 3% yearly(g)

Tobacco products

527.300

895.841

+  69.89%

+ 795.84%

College tuition/fees

527.200

  749.950(b)

+  42.25%

+ 649.95%

Hospital services

477.200

  731.958(c)

+  53.39%

+ 631.96%

Edu. books/supplies

399.500

602.091

+  50.71%

+ 502.09%

Housing at school

362.900

489.877

+  34.99%

+ 389.88%

Water and sewage

302.500

462.214

+  52.80%

+ 362.21%

Oranges/tangerines

370.700

459.633

+  23.99%

+ 359.63%

Prescription drugs

362.300

   452.120(d)

+  24.79%

+ 351.12%

Motor vehicle insur.

335.200

430.163

+  28.33%

+ 330.16%

Garbage collection

337.200

423.413

+  25.57%

+ 323.41%

Cable/satellite svcs.

344.700

416.841

+  20.93%

+ 316.84%

Misc. personal svcs.

318.700

   388.609(e)

+  21.94%

+ 288.61%

Propane, firewood

271.900

  387.559(f)

+  42.54%

+ 287.56%

Bananas

174.500

202.051

+  15.79%

+ 102.05%

 

 

(a)   Women’s suits declined in price for over twenty years, but inched upwards since.  Juices and drinks are the food item showing the least inflation, over both eight and thirty years.  (This may not change, despite weather damage to the Florida orange crop, since citrus is a high-inflation item and manufacturers have increasingly turned to chemical substitutes.)

(b)   Elementary and secondary private school tuition and fees were only a tenth of an index point lower in December, 2005, and had risen to “only” 710.282 by this March.

(c)   All medical care services clocked in at 356.000 by the end of 2005 and rose to “only” 463.678 by March.  On the other hand, health insurance had barely risen to 106.4 eight years ago and, though it has increases more rapidly, still stood at 122.801 last month, trembling at the precipice of Obamacare.  (The first law of medicine, as well as mechanics, is “if it ain’t broke, don’t fix it!”)

(d)   Nonprescription drugs have only been tracked since 2009… their base of 100.000… and, since, have actually fallen to 98.159.  It is obvious that this form of protectionism is highly profitable, but a reform of this and other glitches in the abominable U.S. healthcare industry would be a far more useful policy than has been Obamacare.

(e)   “Miscellaneous personal services” include both high and low-inflation entries… the most expensive of which have been legal and financial services and funeral expenses.

(f)   Fuel oil, actually cheaper in 2006 at 240.900 was, at 393.705, slightly more expensive than the named alternatives by last month.  Men’s sweaters, on the other hand, were actually cheaper than three decades ago, having fallen to 82.733.

(g)   Compounded interest.

________

THE DON JONES INDEX

CHART of CATEGORIES w/ VALUE ADDED to EQUAL BASELINE of 15,000.00

(REFLECTING… approximately… DOW JONES INDEX of June 27, 2013)


See a further explanation of categories here…

Simply recording gains or losses is deceptive, because some of the indices here represent GOOD things (like incomes and life expectancy) while others represent BAD things (unemployment, terror).  So, increases in good things and decreases in bad things are considered GOOD (and are depicted in GREEN) – decreases in good things and increases in the bad are considered BAD (and are depicted in RED).

The sum of good things, less the sum of bad things, equals the gain (or loss) to Don Jones.

DON JONES’ PERSONAL ECONOMIC INDEX  (45% of total Index points)

INCOME

(24%)

BASE 6/27/13

RECKONINGS

   LAST      CHANGE    NEXT

   DON          4/23/14

   DON          4/30/14

OUR SOURCE(S)

Wages (per cap.)

10%

1500 points

3/12/14

1513.96

3/5/14

1513.96

1513.96

 http://www.tradingeconomics.com/united-states/wages   10.34 nd 10.31

Equality

5

750

9/10/13

711.55

?

711.55

711.55

http://stats.oecd.org/Index.aspx?DataSetCode=IDD  .038 nd (2010)

Unemployment %

9

450

3/12/14

523.46

May 2014

523.46

523.46

http://data.bls.gov/timeseries/LNS14000000   6.7 n/d

Official #

450

4/23/14

504.42

5/7/14

504.42

504.42

http://www.usdebtclock.org/         10282 10251 10406  10383

Unofficial #

450

4/23/14

536.83

5/7/14

536.83

536.83

http://www.usdebtclock.org/          19329 19279 19450 19402

WEALTH

6%

 

 

 

 

 

 Dow Jones 

2

300

4/23/14

+0.47%

5/7/14

307.96

307.96

Dow Jones index    16424.85 16501.65 16562.74

Home Valuations          

2

300

4/22/14

sales -0.2  price +5.0

5/22/14

168.07  190.33

168.07  190.33

http://www.realtor.org/topics/existing-home-sales    -0.2 (4.59M) nd http://www.realtor.org/research-and-statistics  189 nd 198.5

Debt (Personal)     

2

300

4/23/14

+0.10%

5/7/14

286.71

286.71

http://www.newyorkfed.org/research/data indicators/household index.html  and http://www.usdebtclock.org/       51696 51746 nd

OUTGO

15%

(See (b)  below)

 

 

 

 

Inflation                   

9

1350

4/16/14

n/d

Apr. 2014

1331.60

1331.60

http://www.bls.gov/news.release/cpi.nr0.htm   +0.2 (mar) nd

Food

2%

300

4/16/14

n/d

Apr. 2014

294.48

294.48

http://www.bls.gov/news.release/cpi.nr0.htm   +0.4 nd

Gas

2%

300

4/16/14

-1.7%

Apr. 2014

310.56

310.56

http://www.bls.gov/news.release/cpi.nr0.htm    -1.7 nd

 

Taxes

2%

300

variable

n/d

?

300

300

 

 

 

 

 

 

 

 

UNITED STATES ECONOMIC INDEX  (15%)

ANNUAL

5%

 

 

 

 

 

 

 Income (per cap.)

1%

150

4/23/12

n/d

Yearly

151.08

151.08

http://bber.unm.edu/econ/us-pci.htm

Expends. (cnsmr.)      

1%

150

12/24/13

n/d

Feb. 2014

149.70

149.70

http://www.bls.gov/cpi 

 U.S. Debt

3%

450

4/23/14

+0.051%

5/7/14

426.58

426.58

http://www.usdebtclock.org/     17581 17546 17554

CUMULATIVE

5%

 

 

 

 

 

Revenues

1%

150

4/23/14

+0.17%

5/7/14

163.19

163.19

http://www.usdebtclock.org/       2897 2902 2907

Expenditures

1%

150

4/23/14

+0.06%

5/7/14

150.03

150.03

http://www.usdebtclock.org/       3523 3525 3528

Total Debt 

3%

450

4/23/14

+0.04%

5/7/14

431.57

431.57

http://www.usdebtclock.org/       61456 61483 61507

WORLD TRADE

5%

 

 

 

 

 

 

Exports

1%

150

4/16/14

-1.09%

5/6/14

153.83

153.83

http://www.census.gov/foreign-     trade/statistics/highlights/congressional.html     190.4F nd

Imports 

1%

150

4/16/14

+0.47%

5/6/14

145.70

145.70

http://www.census.gov/foreign-trade/statistics/highlights/congressional.html     2327F nd

Trade Deficit

1%

150

4/16/14

+7.57%

5/6/14

141.55

141.55

http://www.census.gov/foreign-trade/statistics/highlights/congressional.html    423F nd

Foreign Debt 

2%

300

4/23/14

+0.12%

5/7/14

312.87

312.87

http://www.usdebtclock.org/      5908 5965 nd 5975

 

 

 

 

 

 

 

EDUCATION INDEX        (10%)

World Standard

4%

600

2010

n/d

Yearly

599

599

Test Scores

2%

300

2010

n/d

Yearly +

300

300

 

Dropout Rate

2%

300

2010

n/d

Yearly +

300

300

 

Costs

2%

300

8/15/12

n/d

?

 286.36

286.36

http://nces.ed.gov/fastfacts/display.asp?id=76  (2011-2)

 

 

 

 

 

 

 

HEALTH INDEX        (10%)

Life Expectancy

4%

600

2012

n/d

unknown

600

600

n/d

Medical Costs

2%

300

4/16/14

n/d

4/14

296.41

296.41

http://www.bls.gov/news.release/cpi.nr0.htm   +0.3 nd

Environment

3%

450

4/23/14

+0.1%

5/7/14

440.47

440.47

    The usual suspects are arguing that the end of the world is at hand.  The other usual suspects say El Nino’s to blame.

Natural Disasters

1%

150

4/23/14

-0.1%

5/7/14

134.69

134.69

    Is the bug that’s eating up Florida orange crops natural or not.  (Like many other things, it’s an Asian import.)

 

 

 

 

 

 

 

SECURITY INDEX           (5%)

Crime Rates

3%

450

2013

n/d

unknown

447.80

447.80

  n/d

Prison Population

1%

150

2013

n/d

unknown

155.15

155.15

   n/d

Terrorism

1%

150

4/23/14

-0.5%

5/7/14

147.55

147.55

Celebrations all around as the Boston Marathon concluded without incident.

 

 

 

 

 

 

 

LIBERTY INDEX   (5%)

Freedom

3%

450

4/23/14

+0.3%

As occurs

451.10

451.10

Finally, the President showed a little testicular fortitude in sending paratroopers to Poland… which is, at least, nearer to Ukraine than Georgetown.

Corruption

1%

150

4/2/14

+0.2%

As occurs

169.60

169.60

    Primary season is underway and, fueled by the Koch Brothers and Citizens United, so is the morbid fun.  Do Republicans really hate other Republicans more than they hate Democrats

World Peace

1%

150

4/23/14

-0.1%

5/7/14

141.23

141.23

Mr. Putin denies that Russia has a hand in the pro-Russian militia attacks in Donetsk & environs.  But what’s that purple on his fingers?  Africa?  Shhhh!

 

 

 

 

 

 

 

TRANSIENT INDEX    (10%)

All

10%

1000

4/23/14

-0.1%

5/7/14

981.91

981.91

Bad news confined to the wage inflation front as Don Jones experiences sticker shock on food, gas & just about everything else with lower pay.  But hey!... they finished the Boston Marathon.

 

SUMMARY:

The Don Jones Index for the week of April 24th through April 30th was DOWN 6.25 points.

The Don Jones Index is sponsored by the Coalition for a New Consensus: retired Congressman and Independent Presidential candidate Jack “Catfish” Parnell, Chairman; Brian Doohan, Administrator/Editor.  The CNC denies, emphatically, allegations that the organization, as well as its officers (including former Congressman Parnell, environmentalist/America Firster Austin Tillerman and cosmetics CEO Rayna Finch) and references to Parnell’s works, “Entropy and Renaissance” and “The Coming Kill-off” are fictitious or mere pawns in the e-serial “Black Helicopters” - and promise swift, effective legal action against all parties promulgating this and other such slanders.

 

Comments, complaints, donations (especially SUPERPAC donations):  feedme@generisis.com

 

  Inflation at 2%     1.42%    Inflation at 4%   At 8%

0          100.0             100.0             100.0             100.0             100.0

1          102.0             101.42          104.0             108.0             110.00

2          104.04          102.86          108.16          116.64          121.00

3          106.12          104.32          112.49                                  133.10

4          108.24          108.83          117.0

5          110.40          110.37          121.67

6          112.61          111.94          126.54

7          114.86          113.53          131.60

8          117.26          115.14         

9          119.50          116.68

10       121.90          118.43

11       123.00          120.11

12       125.46

13       127.97

14       130.53

15       133.14

16       135.80

17       138.52

18       141.29

19       146.94

20       149.88

21

22

23

24

25

26

27

28

29

30

 

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 collected—most recently during the 2003-2004 Consumer Expenditure Survey—they 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 items.

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

Item

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

Energy

7.991

153.7

208.0

10.8141

10.352

All Items

100.000

190.3

198.8

104.4666

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

Item

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

Energy

10.352

+ 1.0 percent, or 1.01

10.456

10.456 – 10.352 = 0.104

All items

100.000

+ 0.2 percent, or 1.002

100.200

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)