Consumer Price Index (CPI-U and CPI-W)
This page provides an overview of the Consumer Price Index for local governments in Washington State, including CPI geographic regions and links current and historical CPI data.
Overview
The Consumer Price Index (CPI) is a measure of the change in prices paid over time for a fixed market basket of goods and services, as calculated by the U.S. Bureau of Labor Statistics (BLS). It is one of the most widely used measures of inflation by both government and private sector organizations, and it is divided into two population groups:
- The Consumer Price Index for All Urban Consumers (CPI-U) measures the percentage change in prices faced by urban consumers and covers approximately 93% of the nation's population.
- The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a subset of the CPI-U and is sometimes referred to as the "blue-collar measure." Its market basket reflects the expenditures of urban households that derive more than half their income from clerical and hourly wage jobs. It covers approximately 29% of the nation's population.
Many governmental entities use the CPI for various purposes, such as cost-of-living adjustments (COLA) for employees who are part of collective bargaining agreements, pension adjustments, or automatic increases for certain fees or revenue sources such as impact fees or multi-year levy lid lifts.
Annual changes to the statewide minimum wage that employers must pay – and, by extension, the state overtime thresholds which are calculated as a multiplier of the minimum wage rate – are tied to the CPI-W.
CPI Geographic Regions
BLS releases CPI-U and CPI-W data for a number of different geographic areas across the country, including the following regions of interest to local governments in Washington:
- U.S. City Average – Nationwide index; released monthly.
- West Census Region – Washington, Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, and Oregon; released monthly. Includes two population classes.
- Pacific Census Division – Washington, Alaska, California, Hawaii, and Oregon; introduced at beginning of 2018 and released monthly.
- Seattle-Tacoma-Bellevue metro area – King, Snohomish, and Pierce counties; released every two months. Formerly the Seattle-Tacoma-Bremerton index.
Seattle-Tacoma-Bellevue is currently the only metropolitan area of the Pacific Northwest that is represented. The Portland-Salem index (which included Clark County) was discontinued at the end of 2017.
Practice Tip: The Bureau of Labor Statistics recommends using one of the U.S. City Average indexes for contract adjustments. (See How to Use the Consumer Price Index for Escalation.) The regional and metropolitan indexes are based on smaller samples and potentially more volatile due to measurement error, and the Seattle-Tacoma-Bellevue index is also published less frequently. However, a number of local governments in Washington have opted to use one of other indexes, such as Seattle-Tacoma-Bellevue or the West region.
None of the CPI indexes measure price changes in rural areas. But recognizing that local governments in rural areas need some indicator to use, we recommend one of the U.S. City Average indexes.
Whichever CPI index you choose to use – whether CPI-U or CPI-W, U.S. City Average, West Region, Seattle-Tacoma-Bellevue, etc. – make sure to document it clearly.
Current CPI Data and Release Schedule
The U.S. City Average, West, and Pacific indexes are updated on a monthly basis, while the Seattle-Tacoma-Bellevue region is released every two months (in odd-numbered months for the preceding even-numbered month). The BLS release schedule shows the upcoming release dates each month and also includes an online calendar that you can subscribe to.
For CPI data, see the following BLS resources:
- Consumer Price Index Pacific Cities and U.S. City Average Data Tables – Monthly, semiannual, and annual CPI-U and CPI-W data for each geography. You can also download any of the data sets to Excel.
- Western CPI Summaries – Monthly CPI overviews showing change and comparison between regions
- CPI Historical Table for Portland-Salem – Discontinued at end of 2017, but provided as a reference for those jurisdictions that were using the Portland-Salem index
Practice Tip: Never use estimates for contract adjustments. Always write your contracts so that you will be adjusting on the basis of actual CPI figures.
Recommended Resources
Below are some useful resources from the U.S. Bureau of Labor Statistics:
- How to Use the Consumer Price Index for Escalation – General guidelines to consider when developing an escalation agreement using the CPI
- Consumer Price Index FAQs
- Addressing Misconceptions About the Consumer Price Index (2008)
