The Consumer Price Index for All Urban Consumers (CPI-U) and the Core Rate are important tools in the analysis of the economic situation of a country. The US Bureau of Labor Statistics (BLS) releases estimates on the two economic indicators. An analysis of the data presented in the economic statistics report illustrates an expected upward trend in the CPI-U value while the Core Rate remains at a low level. The trend in the Gross Domestic Product (GDP) highlights the progression towards stabilized prices and the reduction in the unemployment rate. Stabilized prices, excluding food and energy, are the core indicators of an upward trend in the CPI-U value and a low Core Rate. The Core Rate indicates an expected rise of indexes for items such as shelter, medical care and recreation. The trend in the CPI index is an indicator of positive changes in the CPI-U value and a Core Rate conducive for economic progress, which enables residents of urban and metropolitan areas to increase their expenditures (Baumohl, 2005).
The adjustment of wages, rent and child support is dependent on consumer price indexes. Thus, access to CPI-U and Core Rate estimates is crucial during the negotiation of employment contracts and in making decisions to adjust workers wages especially for business establishments in urban and metropolitan areas. An evaluation of CPI-U and Core Rate values provides a business owner with an estimate of the inflation rate. Inflation is a key consideration in planning business operations as it causes fluctuations in cost estimates and profit margins. CPI-U estimates enable potential investors to analyze target markets before venturing in businesses of interest (Baumohl, 2005). It provides trends in consumer spending and price changes. The Core Rate helps businesses to forecast price trends over a long period and thus is crucial in making long-term economic decisions. In addition, the Core Rate influences the stability of a country’s currency, which affects businesses involved in import trade.