Issue Brief: Drivers of Consumer Price Index

May 23, 2024 / RERI Research Team

The Consumer Price Index (CPI) is an often-cited economic indicator when discussing the overall state of inflation in the United States. The index is calculated by the Bureau of Labor Statistics on a monthly basis, utilizing data collected from thousands of retail and service establishments, along with additional information collected from renters and landlords. An intriguing aspect of the CPI is the ability to break out inflation information by component.

In this Issue Brief, we dive deeper into CPI data to better understand which components of CPI contributed to the accelerated inflationary pressures faced between January 2021 and April 2024. We first provide some context on the underlying representative basket of goods and services used to measure CPI and look at the relative importance of each major component. Second, we examine the United States CPI from 2019 to 2024 and how much each component contributed to CPI. Third, we perform a similar analysis for the two local MSAs – the Miami-Ft. Lauderdale-West Palm Beach, FL and Tampa-St. Petersburg-Clearwater, FL MSAs. We conclude the Issue Brief by looking at some of the larger contributors to CPI to learn about which sub-components are the primary drivers for each component.

Our analysis finds that the rise in CPI from January 2021 to June 2022 was primarily driven by three components – transportation, housing, and food and beverages. Housing remains the primary driver of CPI in April 2024, accounting for approximately 60.0 percent of total growth in the CPI. When analyzing the local MSAs, our analysis reveals that the housing component made an even more substantial contribution. The housing component for the Miami-Ft. Lauderdale-West Palm Beach MSA accounted for 64.4 percent of total CPI growth in April 2024, as well as 67.6 percent of total CPI growth for the Tampa-St. Petersburg-Clearwater MSA in March 2024.

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Issue Brief: Drivers of Consumer Price Index

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