Cpi

CPI, or the Consumer Price Index, is a statistical measure that tracks changes in the prices of a representative basket of goods and services purchased by households. In the United States it is published by the Bureau of Labor Statistics and serves as a primary gauge of inflation. The most widely cited series are the CPI-U (all urban consumers) and CPI-W (urban wage earners and clerical workers); a chained CPI-U (C-CPI-U) is also published to reflect substitution across item categories. CPI data are used to adjust incomes, taxes, and government benefits, and to inform economic policy and business planning.

Methodology: The CPI basket covers housing, transportation, food, medical care, and other expenditures. Prices are collected monthly from thousands of outlets nationwide, and weights come from the Consumer Expenditure Survey. An index base period sets the reference value (historic bases vary; commonly 1982–84 = 100). The traditional CPI uses a fixed basket, while the chained CPI accounts for changes in consumer buying patterns and typically rises more slowly. A core CPI excludes food and energy to show underlying inflation.

Limitations and use: CPI measures price changes for a broad urban population and may not reflect individual experience. Limitations include substitution bias, quality adjustments, new product entries, and housing measurement issues such as owners’ equivalent rent. Geography, timing, and outlet selection also affect results. CPI is related but not identical to the Personal Consumption Expenditures price index (PCE). It remains a primary inflation benchmark used for cost-of-living adjustments, contract indexing, and policy analysis.