Examining Alternative Inflation Indices for Regulating Market Dominant Price Increases

This white paper examines the potential impact on price authority and revenue if the price cap had been based on alternative inflation indices instead of the Consumer Price
Index for All Urban Consumers (CPI-U). Specifically, the Office of Inspector General selected and analyzed six alternative indices: Chained Consumer Price Index for All Urban Consumers, Personal Consumption Expenditures Price Index, Gross Domestic Product Price Index, Producer Price Index for Final Demand, Employment Cost Index, and Consumer Price Index for Delivery Services.

The goal of this paper is not to suggest which index is “the best” or “better” than the CPI-U. It is to understand how each of these alternative indices would have impacted price authority and revenue and aligned with the Postal Service’s cost inflation since Fiscal Year 2011.