6.1: Inflation Index
SWITCH TO A MORE ACCURATE MEASURE OF INFLATION FOR INDEXED PROVISIONS. Other Information:
Rely on chained CPI to index all CPI-linked provisions across government. The Commission recommends adopting the “chain-weighted”
Consumer Price Index for Urban Consumers (C-CPI-U) for all federal programs and tax provisions that currently rely on the
CPI-U and CPI-W. The C-CPI-U is an alternative measure developed by the Bureau of Labor and Statistics that uses a technical
improvement to more appropriately adjust for upper level substitution bias – one factor in how consumers change purchase decisions
as relative market prices change. For example, when one product in the market basket (apples) becomes more expensive, consumers
will forego purchasing that item in favor of a cheaper alternative (oranges).
Indicator(s):
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