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Comparison of Chained CPI‐U and Regular CPI‐U All‐U.S. Indexes in the Housing Sector (2000—2004)

Owen J. Shoemaker


In February, 2006, the BLS calculated and published its fourth annual set of C-CPI-U indexes —- for the 12 months of 2004. The C-CPI-U (Chained Consumer Price Index - Urban) is calculated and published every year, with a one year lag, using a Tornqvist formula, which is a Superlative index formula. By contrast, the regular CPI-U uses a combination (Hybrid) of Geomeans and Laspeyres formulas as its final estimator. For 12-month price changes, the All_US-All_Items chained C-CPI-U index results continue to diverge (significantly lower) from regular CPI-U index results, but in the Housing Sector (Rent plus Owners' Equivalent Rent, or REQ) the Superlative results have begun to track consistently higher than their Regular CPI results. We investigate the anomalous nature of these Housing results, and discover that a mathematical result rather than index theory is determinative.