If the nation's cpi in 150 in year 1 and 180 in year 2, then the rate of inflation will be calculated as:
(180-150)/150 = 20%
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending.
The CPI is among the most widely used indicators of inflation and deflation. In contrast to the producer price index (PPI), which tracks changes in the prices paid to American producers of goods and services, the CPI report employs a different survey methodology, pricing sample, and index weights.
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