Consumer price index (CPI)

The consumer price index tracks the average change over time in the prices paid by households for a representative basket of goods and services — food, housing, transportation, medical care, and more. It is the most widely used measure of consumer-level inflation and is published on a regular schedule by national statistical agencies.

CPI is calculated by pricing a fixed, though periodically updated, basket of items each period and comparing the total cost against a base period, with each category weighted by its share of typical household spending. "Core CPI" excludes volatile food and energy prices to show an underlying trend, distinct from "headline CPI," which includes everything; the two can diverge meaningfully during energy or food price shocks.

CPI feeds directly into monetary policy decisions, wage and benefit adjustments, and inflation-linked bond payouts, and its release is one of the most closely watched economic data points by financial markets, often moving the yield curve alongside labor-market data such as the unemployment rate. The common misreading is treating CPI as a personal cost-of-living measure: it reflects an average basket and weighting that may not match any individual household's actual spending pattern, and how the basket and its weights are defined, a methodological choice that differs across countries, can meaningfully affect the reported rate — a gap nowcasting models try to anticipate ahead of the official release.