It's quite EASY to use the CPI. Let's measure the rate of inflation (how fast prices rose) from 2001 to 2002. The annual CPI for 2001 is 177.1, and the annual CPI for 2002 is 179.9. Just CALCULATE the percentage change between the two index values ((179.9 - 177.1) / 177.1 )*100), and you'll see that prices rose 1.6 percent from 2001 to 2002.

Another way of thinking about the inflation rate is to ask how much will a dollar buy now versus what a dollar would have bought before? In our example, $1.00 in 2001 had the same value as $1.06 in 2002. In terms of what you can buy with one dollar, you are worse off in 2002: to buy what COST $1.00 in 2001, you needed $1.06 in 2002.

This relationship is easier to see if we use a longer TIME period. One dollar of goods in 1980 would cost $2.29 in 2004. You can calculate this measure for any two years with the BLS inflation calculator.

It's quite easy to use the CPI. Let's measure the rate of inflation (how fast prices rose) from 2001 to 2002. The annual CPI for 2001 is 177.1, and the annual CPI for 2002 is 179.9. Just calculate the percentage change between the two index values ((179.9 - 177.1) / 177.1 )*100), and you'll see that prices rose 1.6 percent from 2001 to 2002.

Another way of thinking about the inflation rate is to ask how much will a dollar buy now versus what a dollar would have bought before? In our example, $1.00 in 2001 had the same value as $1.06 in 2002. In terms of what you can buy with one dollar, you are worse off in 2002: to buy what cost $1.00 in 2001, you needed $1.06 in 2002.

This relationship is easier to see if we use a longer time period. One dollar of goods in 1980 would cost $2.29 in 2004. You can calculate this measure for any two years with the BLS inflation calculator.