Adjusting Income for Inflation
Income components were reported for the 12 months preceding the interview month. Monthly Consumer Price Indices (CPI) factors were used to inflation-adjust these components to a reference calendar year (January through December). For example, a household interviewed in March 2007 reports their income for March 2007 through February 2007. Their income is adjusted to the 2007 reference calendar year by multiplying their reported income by 2007 average annual CPI (January-December 2007) and then dividing by the average CPI for March 2006-February2007.
In order to inflate income amounts from previous years, the dollar values on individual records are inflated to the latest years dollar values by multiplying by a factor equal to the average annual CPI-U-RS factor for the current year, divided by the average annual CPI-U-RS factor for the earlier/earliest year.