How it's calculated
The BLS collects about 80,000 prices each month across categories like housing, food, and medical care, weighting them by how much households spend on each. Shelter is the biggest piece. The 12-month percent change is the inflation rate you hear about. Core CPI excludes volatile food and energy.
Why it matters
If groceries and rent eat a bigger share of your budget, your personal inflation can feel higher than the headline. CPI drives the annual Social Security cost-of-living adjustment and TIPS payouts and shapes Fed rate decisions, though the Fed officially targets PCE inflation. Persistent increases are inflation.
FAQ
- What's the difference between CPI and PCE?
- PCE covers a broader range of spending and adjusts faster for substitution, so it usually runs a bit lower.
- Why exclude food and energy?
- They swing a lot, so core CPI shows the underlying trend.
Sources reviewed: 2026-10-26
References
- 통계청. 소비자물가조사 개요. 국가통계포털(KOSIS).
- U.S. Bureau of Labor Statistics. Handbook of Methods: Consumer Price Index.
- Boskin, M. J., et al. (1996). Toward a More Accurate Measure of the Cost of Living. Report to the Senate Finance Committee.