AI-assisted source check by Codex, 2026-10-08. Human editorial review not recorded.
The idea
CPI tracks changes in the prices of a representative consumer basket. Our annual inflation measure compares CPI with the same calendar month a year earlier. The index level and its percentage change answer different questions.
Illustrative example
Illustrative CPI values of 200 and 210 one year apart give 100 × (210 / 200 − 1) = 5%. These are invented teaching inputs, not historical observations.
Limits
A household’s basket may differ from the average. Lower positive inflation means prices rise more slowly, not that prices fall. Seasonal adjustment and revisions affect comparisons.