What is the largest factor in the Consumer Price Index for Wage Earners (CPI-W)?

Housing is the largest factor in the Consumer Price Index for Wage Earners (CPI-W) because it encompasses a significant portion of household budgets. The CPI-W, which measures changes in the price level of a basket of consumer goods and services typically purchased by wage earners, assigns a substantial weighting to housing costs, which include rent for tenants and owner-occupied housing costs.

This heavy weighting reflects the reality that housing expenses, such as rent or mortgage payments, property taxes, and maintenance costs, generally constitute one of the largest ongoing expenses for consumers. The high contribution of housing to overall cost-of-living increases ensures that when the prices of homes or rents rise, it significantly impacts the CPI-W, making housing a critical component in evaluating economic inflation and the purchasing power of wage earners.

In comparison, while transportation, healthcare, and food are also important categories, their overall impact on the CPI-W is less pronounced than that of housing. This highlights the central role that housing plays in the financial well-being of wage earners.