These contracts include labor union contracts, rental agreements with annual escalators, inflation-protected insurance policies, alimony and child support payments, among others. Each month, the BLS gathers data from approximately 23,000 retail and service establishments, along with rental data from thousands of landlords or tenants, generating about 94,000 price quotes. However, it excludes income taxes and Social Security taxes, which are not purchases of consumer goods and services. It also doesn’t include investments such as stocks, real estate, bonds and life insurance, which are not daily consumption expenses. For example, in the category of food and beverages, the index tracks individual prices such as for flour, breakfast cereal, rice, pasta, cakes, beef, pork, milk and many, many more items. The CPI is calculated using the prices of tens of thousands of different goods and services.
- It does not require an estimate of how much that identical person is paying now on the actual house she bought in 2006, even though that is what personally concerns her now.