top of page
Person Analyzing Graphs On Screen

US Consumer Price Index (CPI)

Image by Element5 Digital

Consumer Price Index (CPI) Explained

The Consumer Price Index (CPI) is a measure of the average change over time in the prices that people pay for a fixed supply of goods and services.

What does it measure?

The CPI measures changes over time in the price of a basket of consumer goods and services purchased by households.

For example, if the price of bread goes up, then we know that the overall cost of living has increased. If the price of milk decreases, then we know that there is less inflation than expected.

The Consumer Price Index (CPI) is one of the most widely used economic indicators. It shows inflation trends over time by comparing prices of a fixed set of products and services. The CPI is calculated by the Bureau of Labor Statistics using data from the U.S. Department of Commerce's Bureau of Economic Analysis.

Why is it important?

Inflation is one of the main reasons why people save money. If the cost of living rises faster than wages, then people will need to spend less each month just to maintain their standard of living. This means that they will have more money left over at the end of the month to put into savings.

How is it calculated?

The CPI is based on data collected from thousands of businesses across the United States. These businesses report what they pay for products and services every month. The Bureau of Labor Statistics then calculates how much these companies would have had to pay if they bought the same items and services at the beginning of the year. They do this using a formula called the “price index.”

bottom of page