Household Cost Indexes: Prototype Methods and Results, US

We estimate a family of price indexes known as Household Cost Indexes (HCI) using U.S. data. HCIs aim to measure the average inflation experiences of households as they purchase goods and services for consumption, and similar indexes are produced in the United Kingdom and New Zealand. These differ from the Bureau of Labor Statistics’ headline Consumer Price Index (CPI) products in two main respects. First, the upper-level aggregation of the HCIs weights households equally, unlike most headline CPIs which implicitly give more weight to higherexpenditure households. Second, the HCIs use the payments approach to value owner-occupied housing services explicitly using household outlays. In contrast, the U.S. CPIs use rental equivalence. The HCI for all urban consumers has an average 12-month change of 1.51% over December 2011 to December 2021, compared to 1.86% for the CPI-U. The bulk of the difference is due to the payments approach.