Reading the data
How to read CPI without mixing up the numbers
Make sense of index levels, percentage changes, headline inflation, and core inflation.
Start with the index
The Consumer Price Index tracks average changes in prices paid by consumers. An index level is not a dollar amount or an inflation rate. CPI-U describes urban consumers, and its basket represents an average rather than one specific household. The BLS CPI FAQ explains its coverage and limitations.
Calculate a change, not a subtraction
Suppose an index rises from 250 to 260. The increase is 10 index points, but the percentage increase is 4%: (260 ÷ 250 − 1) × 100. If an index rises from 100 to 110, the same 10-point increase is 10%. Always divide by the starting level. Both examples are hypothetical.
Choose the time window
A monthly change compares adjacent months. A year-over-year change compares a month with the same month a year earlier. Seasonal adjustment accounts for recurring seasonal patterns and is commonly used for monthly comparisons. Keep the adjustment basis consistent when calculating a change; do not combine an adjusted endpoint with an unadjusted starting point.
Headline and core answer different questions
Headline CPI includes the full basket. Core CPI excludes food and energy, whose prices can be volatile. Core does not mean those purchases are unimportant. When reading a release, label which measure you are using before drawing a conclusion. A headline and a core rate can move differently without either being an error.
A quick reading routine
Record the index name, geography, month, comparison period, and seasonal-adjustment basis. Then check whether a chart shows index levels or percentage changes. For a narrower category, explore grocery-price history. Compare like with like: a grocery series and an all-items series describe different baskets.