The consumer price index (CPI), a common measure of inflation, measures the price change over time for a basket of goods and services. The basket is representative of consumer spending patterns, and the change in its price represents the rate of inflation faced by consumers as a whole.
What is a CPI basket?
The U.S. CPI basket includes a 36.1% weighting for shelter costs derived mostly from rents and owners' equivalent. CPI calculations factor in consumer substitution of items rising in price with alternatives and filter out price increases reflecting product improvements.
What is the basket of goods and services used for CPI?
The basket of goods and services used for CPI includes popular items that Americans regularly purchase. The value of the items is proportional to how they are sold. The current cost of the basket is compared to its cost in the prior year, and then multiplied by 100 to determine the percentage.
