The Consumer Price Index (CPI) is a measure of the overall change in consumer prices for a basket of goods and services over time, and is the most often used index for measuring inflation. It is a key measure for policymakers, financial markets, businesses, and consumers, and the widely quoted CPI is based upon an index covering 93% of the United States, including the cost of living in over 43,000 rental housing units.

The CPI is calculated utilizing a base year, which is typically the year just before the current enough year, and is based on a weighted average of monthly prices. To calculate the CPI, prices of a range of goods and services are collected and compared over time, allowing both the tracking of overall inflation, as well as the creation of baskets of goods and services to be tracked by various groups. These baskets are based on the current level of spending by like households, and are reviewed each year by the BLS to ensure familiarity with current market trends.

Any changes in both the types of goods and services tracked or the weight of the items in each basket, can affect the measure of inflation as well as the calculation of the CPI. Because of this, the CPI should be examined in conjunction with other economic indicators rather than used alone to measure inflation in the economy.

In addition to the CPI, there are other price indexes used to measure inflation, including the Producer Price Index (PPI), the Employment Cost Index (ECI), and International Price Index (IPI). While each of these has uses for certain trackable markets, the CPI is the most widely used and accepted measure of inflation, and is typically the one used as the official measure by policymakers and financial markets.

The Consumer Price Index is an important tool used to measure variations in overall economic inflation, and is an invaluable resource for government officials, financial markets, businesses, and consumers alike. It allows the tracking of movement in prices based on a basket of goods and services, allowing both visibility into overall economic trends, as well as drilling down to the more specific data sets required by various sectors of the economy.