What Is the Consumer Price Index for Americans 62 Years of Age and Older (CPI-E)?
Consumer Price Index for Americans 62 Years of Age and Older (CPI-E) — also called Consumer Price Index for Americans 62 Years of Age and Older, CPI-E
The Consumer Price Index for Americans 62 Years of Age and Older (CPI-E) is an experimental inflation index published by the U.S. Bureau of Labor Statistics (BLS). It estimates how inflation affects households headed by someone age 62 or older. Although the CPI-E is often discussed as a possible alternative for calculating Social Security Cost-of-Living Adjustments (COLAs), it is not currently used to determine Social Security, Supplemental Security Income (SSI), or VA disability benefit increases. Federal law currently requires those annual adjustments to be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Official source: bls.gov
What is the CPI-E?
The Consumer Price Index for Americans 62 Years of Age and Older (CPI-E) is an experimental version of the Consumer Price Index developed by the Bureau of Labor Statistics.
Like other Consumer Price Indexes, the CPI-E measures changes in the prices consumers pay for goods and services over time.
The primary difference is the population it is designed to represent.
While the CPI-W measures inflation experienced by urban wage earners and clerical workers, the CPI-E estimates inflation experienced by households headed by someone age 62 or older.
Because older Americans often spend a larger share of their income on healthcare and housing, the CPI-E may reflect different inflation patterns than other Consumer Price Indexes.
Why was the CPI-E created?
The Bureau of Labor Statistics developed the CPI-E to better understand how inflation affects older Americans.
Researchers recognized that retirees often have different spending patterns than working-age households.
For example, older adults may spend:
- More on healthcare
- More on prescription medications
- More on housing
- Less on transportation
- Less on education
- Less on work-related expenses
The CPI-E allows economists and policymakers to study how those differences may influence inflation experienced by older households.
Is the CPI-E used to calculate Social Security benefits?
No.
This is one of the most common misconceptions about the CPI-E.
Current federal law requires the Social Security Administration to calculate annual Cost-of-Living Adjustments (COLAs) using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The CPI-E is not used to calculate:
- Social Security retirement benefits
- Social Security Disability Insurance (SSDI)
- Supplemental Security Income (SSI)
- VA disability compensation
- VA pension benefits
Although Congress has considered proposals to use the CPI-E for Social Security COLAs, no such change has been enacted.
Why do some people support using the CPI-E?
Supporters argue that the CPI-E may better reflect the spending patterns of older Americans.
Because retirees generally spend more on healthcare than younger workers, some believe the CPI-E provides a more accurate measure of inflation for Social Security beneficiaries.
Advocates have proposed replacing the CPI-W with the CPI-E to calculate annual Social Security COLAs.
Whether such a change should occur is a policy question for Congress.
Why is the CPI-E considered experimental?
The Bureau of Labor Statistics describes the CPI-E as an experimental index because it was developed for research purposes and has important methodological limitations.
According to the BLS, the CPI-E uses many of the same underlying price data collected for other Consumer Price Indexes but applies different spending weights to better represent older households.
Because of limitations in the available data, the Bureau of Labor Statistics advises caution when using the CPI-E for policy decisions.
CPI-E vs. CPI-W
These two indexes are frequently compared.
CPI-E
- Represents households headed by someone age 62 or older.
- Experimental index published by the Bureau of Labor Statistics.
- Not used to calculate Social Security COLAs.
CPI-W
- Represents urban wage earners and clerical workers.
- Required by federal law for Social Security COLA calculations.
- Used to determine annual increases for several federal benefit programs.
The two indexes often move in similar directions but may produce different inflation measurements because they represent different populations and spending patterns.
CPI-E vs. CPI-U
The Bureau of Labor Statistics publishes several Consumer Price Indexes.
CPI-U
Measures inflation experienced by the broader urban population and is the BLS's most widely cited inflation measure.
CPI-E
Measures inflation experienced by households headed by someone age 62 or older using an experimental methodology.
Neither index is currently used to calculate Social Security COLAs.
Why this matters
Every year, millions of Americans follow news about Social Security Cost-of-Living Adjustments. Understanding the difference between the CPI-E and the CPI-W helps explain why discussions about Social Security reform often mention both indexes.
Although the CPI-E is an important research tool, the annual Social Security COLA continues to be calculated using the CPI-W unless Congress changes the law.
In real life
- A retiree reads a news article suggesting that Social Security should use the CPI-E instead of the CPI-W and wants to understand the difference.
- A veteran hears that inflation affects annual benefit increases and learns that current VA disability COLAs generally follow the Social Security COLA calculated using the CPI-W—not the CPI-E.
- A policymaker cites the CPI-E during discussions about proposed changes to Social Security COLA calculations.
Also known as
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Frequently asked questions about Consumer Price Index for Americans 62 Years of Age and Older (CPI-E)
What is the CPI-E?+
The CPI-E is an experimental inflation index published by the U.S. Bureau of Labor Statistics that estimates inflation experienced by households headed by someone age 62 or older.
Does Social Security use the CPI-E?+
No. Current federal law requires the Social Security Administration to use the CPI-W—not the CPI-E—to calculate annual Cost-of-Living Adjustments.
Why was the CPI-E created?+
The Bureau of Labor Statistics developed the CPI-E to study how inflation affects older Americans, whose spending patterns often differ from those of working-age households.
Is the CPI-E an official inflation measure?+
Yes, it is an official Bureau of Labor Statistics publication. However, the BLS classifies it as an experimental index intended primarily for research and analysis.
Why do some people want Social Security to use the CPI-E?+
Some policymakers and advocacy organizations believe the CPI-E may better reflect the inflation experienced by older Americans, particularly because retirees often spend more on healthcare.
Does the CPI-E affect VA disability benefits?+
No. Annual VA disability Cost-of-Living Adjustments generally follow the Social Security COLA, which is calculated using the CPI-W under current federal law.
Sources
- Consumer Price Index Experimental (CPI-E)
U.S. Bureau of Labor Statistics — bls.gov - Consumer Price Index Handbook of Methods
U.S. Bureau of Labor Statistics — bls.gov - Cost-of-Living Adjustment (COLA) Information
Social Security Administration — ssa.gov - Social Security Cost-of-Living Adjustments
Congressional Research Service — crsreports.congress.gov - Using an Alternative Measure of Inflation for Social Security Cost-of-Living Adjustments
Congressional Budget Office — cbo.gov