Consumer Price Index (CPI)
Definition
A measure of changes in the prices of a representative basket of consumer goods and services. Its percentage change is a common measure of consumer inflation.
The basket gives more weight to categories that make up a larger share of consumer spending. Comparing the index with its level a year earlier gives a commonly cited annual inflation rate. Individual households can experience different price changes depending on what they buy.
Example
The CPI rises from 200 to 206 over one year. That is a 3% increase in the prices tracked by the index.
Canada
How is Canada’s CPI calculated?
Statistics Canada tracks price changes for a weighted basket of household purchases. If the all-items index goes from 150 to 153 over twelve months, CPI inflation is 2%. Your own spending can feel different if your budget gives more weight to items with faster price increases.
Statistics Canada CPI guideUnited States
How does U.S. CPI differ from PCE?
The CPI tracks prices faced by urban consumers. The broader PCE index includes some purchases made on households’ behalf. If medical prices move sharply, their different weights can lead to different inflation readings.
U.S. Bureau of Labor Statistics CPI