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The Consumer Price Index: Recent Developments

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  • Diewert, Erwin

Abstract

The 2004 International Labour Office Consumer Price Index Manual: Theory and Practice summarized the state of the art for constructing Consumer Price Indexes (CPIs) at that time. In the intervening decade, there have been some significant new developments which are reviewed in this paper. The CPI Manual recommended the use of chained superlative indexes for a month to month CPI. However, subsequent experience with the use of monthly scanner data has shown that a significant chain drift problem can occur. The paper explains the nature of the problem and reviews possible solutions to overcome the problem. The paper also describes the recently developed Time Dummy Product method for constructing elementary index numbers (indexes at lower levels of aggregation where only price information is available).

Suggested Citation

  • Diewert, Erwin, 2013. "The Consumer Price Index: Recent Developments," Economics working papers erwin_diewert-2013-45, Vancouver School of Economics, revised 24 Oct 2013.
  • Handle: RePEc:ubc:bricol:erwin_diewert-2013-45
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    File URL: http://www.economics.ubc.ca/faculty-and-staff/w-erwin-diewert/
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    Cited by:

    1. Jan de Haan & Frances Krsinich, 2014. "Scanner Data and the Treatment of Quality Change in Nonrevisable Price Indexes," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 32(3), pages 341-358, July.

    More about this item

    Keywords

    Consumer Price Indexes; superlative indexes; chain drift; scanner data; Time Product Dummy method; GEKS method for making international comparisons; R;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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