The CPI is a measure of what it costs to buy a bundle of goods today compared to what that bundle of goods cost in the past. The Bureau of Labor Statistics (BLS) conducts a survey (called the Consumer Expenditure Survey) that collects data on how much people pay for various goods and services. The BLS then uses this information to DEVELOP the cost of a "typical" bundle of goods. The actual index is calculated by dividing the price of the bundle in a given year by the price of the bundle in the BASE year (the starting point) and then multiplying by 100. The resulting NUMBER is the CPI.

ALTHOUGH we frequently HEAR about "the CPI," the BLS actually computes more than one CPI, but the most used is the CPI-U, which measures prices for urban consumers.

The CPI is a measure of what it costs to buy a bundle of goods today compared to what that bundle of goods cost in the past. The Bureau of Labor Statistics (BLS) conducts a survey (called the Consumer Expenditure Survey) that collects data on how much people pay for various goods and services. The BLS then uses this information to develop the cost of a "typical" bundle of goods. The actual index is calculated by dividing the price of the bundle in a given year by the price of the bundle in the base year (the starting point) and then multiplying by 100. The resulting number is the CPI.

Although we frequently hear about "the CPI," the BLS actually computes more than one CPI, but the most used is the CPI-U, which measures prices for urban consumers.