What the index is
The Bureau of Labor Statistics (BLS) defines the Consumer Price Index as a measure of the average change over time in the prices paid by consumers for a representative basket of goods and services. The number itself, for example 334.980 for August 2026, has no unit; it says that the basket cost 335.0 percent of what it cost in the base period, 1982 to 1984, which is set to 100. Inflation is the percent change in that number between two dates.
How the basket and the weights are built
- The basket comes from the Consumer Expenditure Surveys, in which households report what they actually buy. Spending is sorted into more than 200 categories within eight major groups: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.
- The weights are each category's share of total spending in the survey, so a price change in rent moves the index far more than the same change in the price of newspapers. The BLS notes that the 2023 index used 2021 survey data, so weights lag spending by about two years.
- The prices: about 80,000 items are priced each month, in person, online and by phone, in cities across the country.
- The formula: price changes are weighted by importance, and since January 1999 most of the basic indexes use a geometric mean, which allows for consumers switching between similar items within a category when one gets more expensive.
From two index values to an inflation rate
The BLS example: an index rising from 112.500 to 121.500 has gone up 9.000 ÷ 112.500 × 100 = 8.0 percent. The same division works over any span. From the site's copy of the all-items CPI-U:
| Period | Index | Change in prices |
|---|---|---|
| August 2025 to August 2026 | 323.976 to 334.980 | 3.4% |
| January 1980 to January 1990 | 77.8 to 127.4 | 63.8% |
| January 1990 to January 2000 | 127.4 to 168.8 | 32.5% |
| January 2000 to January 2010 | 168.8 to 216.7 | 28.4% |
| January 2010 to January 2020 | 216.7 to 258.0 | 19.1% |
| January 1980 to August 2026 | 77.8 to 334.980 | 331% |
To turn an old dollar amount into today's money, multiply it by the ratio of the two index values: an amount from January 1980 times 335.0 ÷ 77.8 = 4.31. The inflation calculator does this for any two months in the series, and the percentage change calculator handles the division for two values you have in hand.
CPI-U, CPI-W and the chained CPI
| Index | Who it covers | Where it is used |
|---|---|---|
| CPI-U | All urban consumers, more than 90 percent of the population | The headline inflation rate, most contracts and calculators |
| CPI-W | Urban wage earners and clerical workers, about 30 percent of the population; excludes salaried professionals, part-time and self-employed workers, the unemployed and retirees | Published alongside CPI-U every month |
| C-CPI-U (chained) | Same population as CPI-U, but the basket shifts as consumers substitute across categories | Published as a preliminary figure and revised three times as the spending data arrive |
The versions move together but not identically, because the chained index credits consumers with buying less of what got expensive. The BLS notes that the CPI is frequently called a cost-of-living index but differs in important ways from a complete one, and calls it a conditional cost-of-living index; the chained version is the one it says some consider closer to the real thing.
What the CPI does not tell you
- Your own inflation rate. The weights are national averages. If you rent, have no car and spend heavily on food, your basket is not the national basket.
- Asset prices. The BLS leaves out investment items such as stocks, bonds, real estate and life insurance, because they relate to savings rather than consumption; housing enters as rent and as owners' equivalent rent, the cost of the flow of services a home provides.
- Quality. The BLS adjusts for changes in quality, from package-size changes to statistical estimates of what an item's features are worth, so that quality changes do not show up as price changes.
- Timing. The national indexes are published monthly and are final when issued, but the figure for a month arrives in the following month, and the chained version is revised for up to a year.
For wages and prices over time, the useful question is not "what is inflation" but "which index, between which two months". The salary converter and the inflation calculator together show what a pay figure from one year is worth in another, and the compound interest calculator shows how a savings rate compares with the inflation rate over the same span.
Frequently asked questions
What is the CPI?
The Consumer Price Index is the Bureau of Labor Statistics' measure of the average change over time in the prices paid by consumers for a representative basket of goods and services. It is published monthly, and the percent change in the index between two dates is what news reports call the inflation rate.
How is the inflation rate calculated from the CPI?
Subtract the earlier index value from the later one, divide by the earlier value and multiply by 100. The BLS example: an index that rises from 112.500 to 121.500 has risen 9.0 ÷ 112.500 × 100 = 8.0 percent. For August 2026 the all-items CPI-U was 334.980 against 323.976 a year earlier, a rise of 3.4 percent.
What is the difference between CPI-U and CPI-W?
Coverage. CPI-U covers all urban consumers, more than 90 percent of the US population. CPI-W is the subset of households where at least one member worked 37 weeks or more in a clerical or wage occupation and at least half the income came from those wages, about 30 percent of the population. Most inflation reporting uses CPI-U.
What is the chained CPI?
A version, C-CPI-U, that lets the basket shift as consumers substitute between categories when relative prices change, which the BLS says some consider closer to a cost-of-living index. Its spending data arrive 10 to 12 months late, so it is published as a preliminary figure and revised three times.
Does the CPI measure my cost of living?
Only on average. The basket is weighted by what all urban households spend together, so a renter in one city with no car and a family with a mortgage and two cars each live a different inflation rate from the national figure. The BLS also publishes regional and metropolitan indexes, and separate indexes for food, energy, shelter and more than 200 other categories.
Sources
- Bureau of Labor Statistics: Consumer Price Index frequently asked questions (what the CPI measures, the market basket and weights from the Consumer Expenditure Surveys, about 80,000 prices a month, CPI-U vs CPI-W, the chained CPI, publication schedule, how to compute percent change)
- Bureau of Labor Statistics: CPI-U, U.S. city average, all items, not seasonally adjusted, 1982-84 = 100 (series CUUR0000SA0), the series behind the figures on this page
- Bureau of Labor Statistics: CPI Inflation Calculator