Consumer Price Index and "Inflation Rate"
Consumer Price Index and "Inflation Rate"
The Consumer Price Index (CPI) is a measure of the change in prices over time in a fixed market of goods and services.The percent change in the CPI from one period to another is generally considered to be the rate of inflation.
- Consumer Price Indexes.
The Bureau of Labor Statistics' CPI for the United States city average and Minneapolis-St. Paul can be found here (under Regional Resources.) - Consumer Price Index Calculator. (Federal Reserve Bank of Minneapolis)
Calculate what an item was worth at another point in time. Or the reverse--what an item purchased at another point in time is worth now. It uses the CPI-U for the United States. - Indicators & Data. (Federal Reserve Bank of Cleveland)
Information on the median CPU, plus links to create charts showing U.S. and World inflation.
Inflation is calculated in the following way: (Example uses U.S. City average, All Urban Consumers, All Items Index, 1982-84=100)
| Current CPI | 208.028 (July 2007) |
| Earlier CPI | 203.2 (July 2006) |
| Difference | 4.828 |
| Divided by earlier CPI | 203.2 |
| Equals | 0.0237 |
| Result x 100 | 2.37% increase from July 2006 to July 2007 |
The CPI measures price changes from a reference base year, which equals 100. The current reference base is 1982-84 (the price index for those three years was averaged to determine the base.) The previous base year was 1967 - CPI data will continue to be available for the 1967 base year as well as the 1982-84 reference base.
CPI figures are available for selected metropolitan areas only and not by state. The Minneapolis-St. Paul MSA (Metropolitan Statistical Area) is the only Minnesota area indexed and figures are available twice each year: in February, for the average of July-December and in August for the average of January-June. A collective average figure for all U.S. cities on which data is available is released monthly.
The CPI reflects expenditures by two population groups. All Urban Wage Consumers (CPI-U) is the most comprehensive and the most often used index. The Urban Wage Earners and Clerical Workers (CPI-W) index represents about half the population covered by the CPI-U. CPI-W exists primarily for contract bargaining by labor unions.
CPI figures (published monthly) and historical CPI data are available from the Bureau of Labor Statistics' Consumer Price Indexes.
For more information, see Gordon Wolford's How the Consumer Price Index Measures Changes in Consumer Prices.
Updated September 2008 mdh
