How To Guide For: Understanding Consumer Price Index

Every month the Bureau of Labor Statistics gathers the average prices paid by consumers for hundreds of different items each month. The average is then compared to a reference base period. That base period is an arbitrary date set by the federal government. Currently, the U.S. uses the average of goods and services from 1982 to 1984 and considers that our reference base period with a factor of 100. The Bureau of Labor Statistics then publishes the results as a number. Consumer Price Index (CPI) is a measure of changes in the purchasing-power of a currency and the rate of inflation. CPI reflects the spending patterns of each of two population groups: all-urban consumers and urban wage earners and clerical workers. It is used as an economic indicator and a means of adjusting income payments. It is calculated by collecting the prices of a sample of representative items over a specific period of time. All of the information is combined to produce the overall index of consumer expenditures. CPI is one of the most closely watched national economic statistics. To get more information on Consumer Price Index click on the pictures below to read the articles.

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