The Consumer Price Index measures average changes in prices paid by urban consumers for a basket of goods and services in the United States.
The U.S. Bureau of Labor Statistics calculates the CPI by collecting prices for categories such as housing, food, transportation, medical care, apparel, and recreation. Each category receives a weight intended to reflect consumer spending patterns. The index is used to track changes in the cost of living and to calculate widely cited inflation rates.
The CPI is not the same as the Producer Price Index, which tracks prices received by domestic producers. It also differs from the GDP price deflator, which covers domestically produced goods and services and has a changing composition. The Personal Consumption Expenditures price index is another important inflation measure.
CPI inflation usually means the percentage change in the index over a specified period, often one year. Because households spend differently, no single index perfectly represents every person’s personal inflation experience.