Difference Between CPI-U and CPI-W

CPI-U vs CPI-W

With the fast increase in prices during World War I, the Consumer Price Index (CPI) was created in order to efficiently calculate adjustments in the cost-of-living of workers. It measures the price level changes of goods and services that are bought by a household.

The prices of the samples of each item are collected regularly in order to come up with the CPI. It consists of the prices of the different categories of goods and services that show how consumers spend their income. The Consumer Price Index has experienced several changes as the world entered World War II and as there were huge changes in buying patterns after it ended. In the late 1970s, the CPI-U and the CPI-W were introduced.

The Consumer Price Index for All Urban Consumers (CPI-U) was introduced in 1978. It includes all urban households within an area that have inhabitants of 2,500 or more. It does not include rural consumers and those that are in military and other institutions. It represents the buying habits of more than 80 percent of the population of the United States including those that are self employed, retired workers, professional workers, clerical, and part-time workers, and even those who are unemployed. It is more of a general index and traces how retail prices affect urban consumers of goods.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), on the other hand, includes sales, craft, service or labor, and clerical workers who must have been employed for 37 weeks or more. It represents 32 per cent of the United States population and is a subset of the CPI-U. It traces how retail prices affect workers who are paid hourly and those that do clerical work. The Social Security Administration uses data from the CPI-U to decide its annual rate of increase.

The CPI-W gives more importance on everyday needs such as food and transportation expenses, clothes, and other goods and services. Housing, medical care, and recreation are given less importance in the CPI-W.

Summary:

1.CPI-U stands for Consumer Price Index for All Urban Consumers while CPI-W stands for Consumer Price Index for Urban Wage Earners and Clerical Workers.
2.The CPI-U represents more than 80 per cent of the population of the United States while the CPI-W represents 37 per cent.
3.While both are concerned with how changes in prices affect urban consumers, CPI-U includes a broader and more diverse group of people in the population while the CPI-W is considered as a subset of the CPI-U.
4.The CPI-U includes only the clerical, sales, craft, service workers, and laborers while the CPI-U includes those that are self-employed, retired workers, professional workers, clerical and part-time workers, and even those who are unemployed.
5.The CPI-U gives weight on all goods and services that consumers need while the CPI-W gives more weight on food, clothing, and transportation.
6.Both the CPI-U and the CPI-W do not include rural consumers and those in the military and other institutions.

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