CPI Education & Communication.
A bundle of two very different sub-aggregates: education (tuition, books, fees) which has been sharply inflationary, and communication (phone, internet, software) which has been one of the most disinflationary parts of the basket. Combined weight is about 6% of CPI-U.
Education & Communication inflation, year-over-year
FRED:FPCPITOTLZGUSA · U.S. CPI YoY (use widget to switch to category series)
MonthlyWhat CPI education & communication measures
The education and communication category is a study in contrasts. Education sub-components — college tuition in particular — have been among the fastest-rising prices in the economy for 40 years. Communication sub-components — telephone service, internet access, computer software — have produced sustained deflation thanks to technology and competition.
Combining the two into a single major category obscures both. Most analysts look at education and communication separately. The combined CPI weight is roughly 6%, split nearly evenly between the two halves.
Sub-component breakdown
| Sub-component | Approx. weight | Notes |
|---|---|---|
| Education | ~3.5% | Tuition, fees, books, supplies |
| College tuition and fees | ~1.6% | Four-year and two-year institutions |
| Elementary and secondary school tuition | ~0.4% | Private K-12 |
| Childcare and nursery school | ~0.7% | Daycare, preschool |
| Educational books and supplies | ~0.1% | Textbooks, school supplies |
| Communication | ~3.5% | Telephone, internet, software |
| Telephone services | ~1.7% | Wireless, residential, long-distance |
| Internet services | ~0.7% | Residential and mobile broadband |
| Information technology, hardware, services | ~0.5% | Computers, software, peripherals |
Weights are shares of CPI-U, rounded. Exact values vary annually. Source: BLS Relative Importance tables.
What moves education & communication inflation
College tuition reflects a mix of administrative cost growth, declining state support for public institutions, and the elasticity of demand subsidized by federal student loans. CPI college tuition is the sticker-price tuition before institutional aid, so it tends to overstate what students actually pay. Even so, the cumulative increase since 1980 is one of the steepest in any CPI category.
Childcare is a labor-cost-dominated service. Tight labor markets and wage growth feed through quickly. Childcare CPI rose sharply post-pandemic as wages in the sector climbed and licensed-capacity supply stayed constrained.
Telephone and internet services have been deflationary for two decades thanks to bundled pricing, unlimited data plans replacing per-minute rates, and competition among carriers. Wireless CPI has been negative year-over-year in most months since 2015.
Computer hardware CPI uses extensive hedonic adjustment. As specs improve at a given price point, the index records this as a price decline. This has produced 10%+ year-over-year drops in computer prices in many years even when nominal retail prices are flat.
How education & communication inflation has behaved
Since 1980, college tuition CPI has roughly increased 8-fold, versus roughly 3-fold for overall CPI. Communication services CPI, by contrast, has barely moved since 2000, and computer hardware CPI has declined dramatically due to hedonic adjustment. The category's combined behavior depends heavily on which sub-aggregate is weighted heavier in any given year.
Frequently asked questions
Why is college tuition rising so fast in CPI?
Multiple factors: rising administrative costs, declining real state appropriations to public universities, demand subsidized by federal student loans, and inelastic demand. CPI captures sticker-price tuition, which can diverge from what students net of aid actually pay.
Is internet service in CPI?
Yes. Residential internet service is a sub-component of communication. CPI internet service has been near-flat to slightly negative for years.
Why does CPI computer hardware show negative inflation?
BLS uses hedonic adjustment for tech goods. As processor speeds, RAM, and storage improve at a given price point, the index treats the improvement as a price decline, even if the dollar list price is unchanged.
Is childcare in education or its own category?
Childcare and nursery school are within the education sub-aggregate. They've been one of the faster-rising sub-components in recent years.
Is education in core CPI?
Yes. Education and communication are both inside core, since neither is food or energy.
How does CPI handle student loan interest?
Student loan interest is not in CPI. CPI measures the price of goods and services, not financing costs. Interest is excluded by design.