What U.S. government index measures average changes in consumer prices and is widely used to track inflation?

The Consumer Price Index measures average changes in consumer prices and is widely used to track inflation.

The U.S. Bureau of Labor Statistics calculates the CPI by pricing a representative basket of goods and services, including food, housing, transportation, medical care, and recreation. The basket reflects spending patterns of urban consumers.

CPI inflation compares the index at different times, usually over 12 months. It is not the same as the cost of every household’s personal budget, because spending patterns vary. Core CPI excludes food and energy to make underlying price trends easier to assess, although consumers still pay those costs.

The CPI is also used for cost-of-living adjustments, including some government benefits and contracts. Another major U.S. inflation measure is the Personal Consumption Expenditures price index, which uses different coverage and weighting methods.