Measuring the ROI of the CPI

The Bureau of Labor Statistics — the agency that produces the monthly jobs report, the consumer price index, and other marquee economic data — had a $700 million budget in 2025. The White House has proposed cutting that budget by almost 8% for the coming year. 

The BLS collects and consolidates critical inflation data for the CPI, which is used by both the U.S. government and private sectors. But producing it takes time and resources. Is it a worthwhile investment? In other words, what’s the return on investment for the CPI?

On the investment side of the equation, the BLS has around 2,000 full time employees. “Which is actually not a lot of people, quite frankly,” said Omair Sharif, president and founder of Inflation Insights, a research and analytics firm. Especially when you consider that the CPI is just one of the reports the agency releases. 

To produce the CPI, the BLS first does an annual survey to figure out what consumers actually buy.

“Once consumers are selected and agree to participate, they're essentially tracking their own spending. And so they're visited every three months over the course of a year by an analyst,” Sharif said, who asks them about their purchasing habits.

“And then separately, they’re also doing what's called the ‘diary survey,’ where they're asked to keep track on their own of different purchases that they make,” said Sharif.

Then, to produce that monthly figure on price changes, the BLS sends field economists out to check around 100,000 prices across the country. According to the agency, around two-thirds of those prices are collected via personal visits to physical stores. 

So that’s the investment side of the equation. But what are we getting from all that effort?

Of course, private companies, researchers, investors, journalists, and the public use the CPI to understand how prices are moving, but the U.S. government itself uses the CPI too. 

“It is the basis for the annual cost of living adjustment, or COLA for both Social Security and the Supplemental Security Income,” said Kathleen Romig, the director of Social Security and disability policy at the Center on Budget and Policy Priorities. 

That annual cost of living adjustment gets announced each October and goes into effect in January for most recipients. In 2025, it was 2.5%.

“Let’s talk about my mom for example,” said Romig. “She's a Social Security beneficiary, she's 78 years old, and every morning she starts her day with a bowl of cereal.”

Like a lot of retirees, Romig said her mom pays for that cereal, primarily, with her Social Security Benefit. 

“And that benefit increases every year, along with the growth in prices, or also known as inflation,” she said. 

If the CPI read on inflation is too low, seniors won’t be able to keep up with rising costs. But if it’s too high, the government potentially could overpay from the Social Security Trust Fund. “It's really in everyone's interest that we get it just right,” said Romig.  

Deborah Lucas, a professor of finance at MIT’s Sloan School of Management and director of the MIT Golub Center for Finance and Policy, did “a little back-of-the-envelope calculation,” which is as follows:

Last year the Social Security Administration paid about a trillion and a half dollars in benefits. Which means that just one small data error in the CPI, one that increased payments by a 10th of 1% ,or 10 basis points, would cost taxpayers $1.5 billion annually, Lucas said. “So we’re talking about a lot of money.”

And that’s just one of many ways the U.S. government uses the CPI. The Treasury Department sells inflation-indexed treasury bonds, some government contracts have CPI adjustments built in, and the IRS uses the CPI to adjust income tax brackets. 

“The value just there covers the cost of the data collection and processing by many, many multiples,” said Lucas. 

One wrinkle here is that the BLS’s job is getting harder. Over the past decade, survey response rates have declined, which makes collecting data more time consuming and expensive. 

At the same time, “they've had big staff cuts,” said Romig. “And that means they don't have enough people anymore to go to all of those stores in person that they used to go to.”

That’s forcing the BLS to rely more on estimates. The share of “different cell imputed” figures in the CPI — which is basically a fancy way of saying “educated guess” — has increased to around 30% from about 10% this time last year.

“If I could double the funding tomorrow, I would,” said Sharif, “because it really does affect everybody in this country.”