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Estimating Price Relatives for the U.S. Consumer Price Index When Priced Items are Restratified

Mary Lee Fuxa


For the 1998 revision of the Consumer Price Index, the stratification of priced items was extensively redefined. Of the 183 item strata: 33 percent did not change; 24 percent were designated for new sampling; 43 percent changed but were not designated for new sampling due to budgetary constraints. Until new samples are rotated in for the 43 percent, an adjusted method of estimation is needed for the monthly price relatives used to compute the index. The price relative for an item stratum and geographic area is a ratio of the sum of weighted price quotes for the current month to the sum for the previous month. This paper presents a method for adjusting the weights used in the price relative. For a test geographic area, estimates with adjusted weights are computed using the retained sample. They are compared to estimates that are computed using a newly selected sample.