What is it?
The Consumer Price Index is a measure of trends in the prices that consumers typically buy. The headline CPI index tracks the prices of a typical basket of goods that an urban household purchases. The CPI is calculated as follows:
CPI = (cost of basket in current year / cost of basket in reference period) * 100
The reference period for the CPI is 1982-1984 so a value of 254 means that consumer prices are 254% higher than they were in 1982-84
SONAR tracks the following granularities for CPI:
ALL – Headline CPI index value including all items
HOUS – The housing component of CPI
GAS – The gasoline component of CPI
SONAR also tracks both the seasonally adjusted (CPI) and the non-seasonally adjusted (CPINS) versions for the index
Who is interested?
Employers, policymakers, economists, analysts
What does it tell me?
CPI is the most commonly used price index when tracking inflation. It is useful when indexing other things, like cost of living adjustments, to inflation. In addition, CPI gives a useful benchmark to compare to wage and income growth to determine real gains. For example, if hourly earnings rose 2% and the CPI rose 1.5%, then real wages really only increased by 0.5%