How the Consumer Price Index is measured, and why your own inflation rate can differ

The Consumer Price Index (CPI) measures how the prices that consumers pay for everyday goods and services change over time. The Bureau of Labor Statistics (BLS) records the prices of about 80,000 items each month and publishes the result in a monthly report. In September 2026, the headline index was 3.7% higher than a year earlier, as our report on September prices explains.

The index is an average. It describes the price changes faced by a large group of households, and the bureau says plainly that "The CPI does not necessarily measure your own experience with price change."

Where the prices come from

According to the technical note published with each release, the bureau gathers prices every month in 75 urban areas, from about 6,000 housing units and about 22,000 retail and service establishments. Data collectors call or visit stores, service businesses, rental units and doctors' offices.

Each price change is then weighted by how much households spend on that item. The weights come from the Consumer Expenditure Surveys, which ask households what they buy. Every January the bureau updates the weights using survey data from two years earlier: the table for December 2025 is labeled "2024 Weights."

Three versions of the index

The bureau publishes several indexes from the same price data. Three of them are used to set payments and taxes that affect household budgets.

The chained index differs in method. The bureau says the C-CPI-U "also allows for substitution across item categories," so it reflects shoppers shifting their spending between kinds of goods and services when relative prices change. It is first published in preliminary form and revised three times, once a quarter, while the CPI-U and CPI-W are final when released.

The Social Security Administration used the CPI-W to set a 3.6% increase in benefits for 2027. The tax code uses the chained index to adjust income tax brackets, as our explainer on tax inflation adjustments shows.

What carries the most weight

The weights show where the average household's money goes. Housing dominates: shelter, which includes rent of primary residence and owners' equivalent rent of residences, accounts for more than a third of the CPI-U.

The CPI-W gives more weight to food, energy, gasoline and rent than the CPI-U does, and less to owners' equivalent rent and medical care. That is one reason the two indexes can move at different speeds when, for example, fuel prices jump.

How the numbers are combined

The bureau builds the index from 243 basic items in 32 geographic index areas. Within most basic items, it uses a geometric mean formula, a weighted geometric average of price changes. It then combines those basic indexes into the published CPI-U and CPI-W with a modified Laspeyres formula, which, the bureau notes, assumes that consumers do not substitute between items.

Monthly changes in the bureau's release are seasonally adjusted: September's 0.6% rise was a seasonally adjusted figure. Twelve-month changes, such as the 3.7% rate, are reported before seasonal adjustment. The bureau re-estimates its seasonal factors every year.

What the CPI leaves out

The CPI is often called a cost-of-living index, but the bureau says it "differs in important ways." It excludes income and Social Security taxes. Investments such as stocks, bonds, real estate and life insurance are left out too, because the bureau treats them as savings rather than day-to-day spending. Housing enters the index through the rent and owners' equivalent rent measures in the table above.

Why your inflation rate may differ

Because the index reflects average spending, households whose budgets look different will see different inflation. A household that spends a larger share than average on gasoline felt September's increase more, because the gasoline index was 34.2% higher than a year earlier.

To compare prices across years, the bureau's CPI Inflation Calculator uses the CPI-U for all items, U.S. city average, not seasonally adjusted. For most series the index's reference base is 1982-84, set equal to 100.

The next report, covering October 2026, is scheduled for Tuesday, November 10, 2026, at 8:30 a.m. Eastern time.