Data and definitions of the Consumer Price Index (CPI) are buried deep on the Bureau of Labor Statistics Web site  so it’s no wonder that most people don’t know what it is or how it affects them.

CPI is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.” [1] But what does the CPI mean for the average American? The BLS attempts to breakdown what CPI is, how it is calculated and how it affects Americans in the ten-page FAQ: http://www.bls.gov/cpi/cpifaq.htm.  But where the BLS succeeds in its depth of data and information on CPI and labor statistics, it fails to provide breakdowns, analyses, and further clarifications of its information for the average person.

The New York Times took a stab at breaking down CPI in its May 2008 interactive feature “All of Inflation’s Little Parts.” [2] The graphic is an impressive dissection of average consumer spending by category and also highlights changes in price from March 2007 to March 2008. I thought this ambitious interactive feature did a great job exploring BLS data and trying to make sense of it.  As a multimedia journalist, I’m a proponent of interactive explanatory journalism.  As a side project, I have decided to produce an informative interactive online application about the Consumer Price Index in order to create a more useful informative experience on CPI for the average reader.

The New York Times interactive was done over two years ago. How has the average American been spending since then? For this project I have attempted to redesign and update the average consumer spending in the vein of The New York Times’ “All of Inflation’s Little Parts” interactive for the most recently released CPI data for March 2010.

My redesigned interactive graphic, titled “How We Spend: A Look at the Consumer Price Index,” while open to subjective criticism on its design, attempts to improve the perception of percentage of spending by using a pie chart, rather than amorphous shapes as the New York Times did.  Slices of the pie chart give users a better sense of relative differences in consumer spending for each category. Whereas the shapes in the New York Times graphic are less defined and harder to compare sizes, pie chart cutouts provide an organized, uniform way of comparing the consumer spending data.

Each slice of the pie chart on average consumer spending is subdivided into categories provided by the BLS and labeled and color-coded for easy identification of groups. Main categories of goods and services include:

• Food and beverages — 14.795%
• Housing — 41.960%
• Apparel —3.695%
• Transportation — 16.685%
• Medical Care — 6.513%
• Recreation —6.437%
• Education and communication — 6.434%
• Other goods and services — 3.483% [3]

Users have the option to look at the macro averages for each main category listed above or to dive deeper and look at further breakdowns by clicking on each category of goods and services. Like the New York Times graphic, users can see what inflation was since March 2009 when they click on each subcategory.

For example, users can see the average percentage of spending for all food and beverages at the macro level (14.795%) and click on that section to see subcategories such as “Fruits and vegetables (1.153% share of spending; change in spending since 2009: 2.1%, indicating people spent more on fruits and vegetables this year than last year).[4] The March 2010 table provided by the BLS unfortunately did not contain as many subcategories as the New York Times’ May 2008 interactive, but I believe my updated interactive provides a good comprehensive look at CPI today and how the average American spends money.

In contrast to the New York Times graphic, my updated interactive graphic was color coded by category rather than by percent change in CPI. If I had more time, I would like to create another layer giving users the option to view the pie chart color coded by percent change in CPI as well.  Instead, I provided a table below the chart that breaks down the greatest percent changes in CPI as listed in Table 1 on the BLS Web Site. [5]

According to the BLS, the goods and services with the greatest percent change (top five increases and decreases) in consumer spending in the last year included:

• Gasoline (+41.4%)
• Household fuel oil and other fuels (+19.6%)
• Used cars and trucks (+16.3%)
• Tobacco (+15.9%)
• Hospital services and other related services (+7.6%)

• Personal computers (-9.1%)
• Men’s and boy’s apparel (-3.9%)
• Lodging away from home (-3.4%)
• Owner’s equivalent of rent (-3.4%)
• IT hardware (-3.2%) [6]

To see average spending and percent changes for the other categories, users need to click on each subcategory on the chart. Again, if I had more time, I would have liked to make a scrollable database as part of the application showing all categories listed on Table 1 ranked by percent change.  In general, I think ranking the percent change information may be a more organized and clear way to present changes in spending habits for different categories from period to period.

This table provides a good look at how people have changed their spending habits in the last year, which is a decent indicator of how the economy is doing.   The fact that less people are spending money on lodging away from home and on owner’s equivalent of rent suggests that people took fewer trips and fewer people bought houses in the last year — which indicates that the economy is still struggling.  Other factors, like the fact that less people are buying expensive products like computers and hardware suggest that the economy has slowed down in the last year.  The jump in spending on tobacco is likely due to other factors like the increased taxes on tobacco products. The increase in purchases of used vehicles instead of new ones also suggests that the economy is not doing too well because people cannot afford to buy new cars and trucks.

To improve upon the features of the New York Times graphic, I wanted to provide another layer of useful, educational information about the Consumer Price Index for those who may not be familiar with what CPI is.  I also think that showing how data is collected and calculated is interesting and might be something readers are curious about when they see a breakdown of how the average consumer is spending. To fit the function of explanatory journalism, I wanted to provide a deeper background on CPI so that readers can gain a better understanding of what CPI means and how it’s calculated.

To do this, I did some research on the Consumer Price Index, primarily on the BLS Web site [7], but also on Wikipedia.[8] I decided to include the basic overview on CPI in a clickable “Consumer Price Index 101” breakout to the right of the average consumer spending pie chart.  The goal of this “101” section is to provide more context on CPI for those who are interested.

The “101” material answers six basic questions about CPI:

• What is the Consumer Price Index?
• How is CPI used?
• How does CPI affect you?
• How is CPI collected?
• How is CPI calculated?
• How is CPI related to inflation?

I used the information provided by the BLS Web sites and Wikipedia to answer these questions, but I edited them down to be as clear and concise as possible.  Instead of having to read long passages from the BLS Web site (which includes a very thorough, but cluttered FAQ section on CPI) and Wikipedia entries (which are also less straightforward), I provided quick facts to give the reader a basic overview on CPI without having to do the research themselves.

With this updated “How We Spend” interactive, instead of having to dig through BLS data, tables, FAQs and long encyclopedic entries, I created a one-stop shop for a quick overview of what CPI is and what its most recent statistics are for March 2010. The interactive graphic provides a relevant and timely look at how the average consumer is spending and how spending has changed in the past year. The table highlights the greatest percent changes since March 2009. The CPI “101” provides the third tier of background information to give users the chance to get to know CPI a little better and understand how it works and what it’s used for.

To summarize, I hope that users of this interactive will provide its users with a better understanding of what CPI is, how it affects them, what it’s used for and how it’s measured — and will also enjoy engaging in the interactive, visual experience.

[1] U.S. Bureau of Labor Statistics Division of Consumer Prices and Price Indexes. http://www.bls.gov/cpi/cpifaq.htm January 14, 2010.

[2] The New York Times. http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html May 3, 2008.

[3] U.S. Bureau of Labor Statistics Division of Consumer Prices and Price Indexes. http://bls.gov/news.release/cpi.t01.htm April 14, 2010.

[4],[ 5] U.S. Bureau of Labor Statistics Division of Consumer Prices and Price Indexes. http://bls.gov/news.release/cpi.t01.htm April 14, 2010.

[6] U.S. Bureau of Labor Statistics Division of Consumer Prices and Price Indexes. http://bls.gov/news.release/cpi.t01.htm April 14, 2010.

[7] U.S. Bureau of Labor Statistics Division of Consumer Prices and Price Indexes. http://bls.gov/cpi April 14, 2010.

[8] “Consumer Price Index” and “U.S. Consumer Price Index.” Wikipedia. http://en.wikipedia.org/wiki/Consumer_price_index April 25, 2010.