This is all over the news. The Consumer Price Index (CPI) is a measure of the average change in prices over time of a basket of goods and services consumed by households. It is calculated by the Bureau of Labor Statistics (BLS) in the United States, and is used as a measure of inflation.

To calculate the CPI, the BLS first selects a “market basket” of goods and services that represent the typical purchases of households. This basket includes items such as food, clothing, housing, transportation, and medical care. The BLS then collects data on the prices of these items, and uses a statistical formula to calculate the average change in prices over time.

The CPI is used for a variety of purposes, including adjusting Social Security payments, determining cost-of-living adjustments for wages and salaries, and as a benchmark for inflation in the economy. It is also used by the Federal Reserve to help guide monetary policy decisions, such as setting interest rates, which lately have been getting all the attention.

In a nutshell, the CPI is a measure of the average change in prices of a basket of goods and services consumed by households, and is used as a measure of inflation. It’s calculated by the BLS and is used for a variety of purposes, including adjusting Social Security payments and determining cost-of-living adjustments. Currently is the most monitored metric in the financial world.