Consumer prices and inflation in the U.S. - statistics & facts
Consumer prices are the prices that people pay for goods and services. The change in consumer price level is an important economic indicator. The most prominent index of consumer price changes in the United States is the Consumer Price Index, published on a monthly basis by the U.S. Bureau of Labor Statistics.
Measurements of CPI can comes in varying forms to provide more accurate measures of different price patters. The core CPI index, for example, excludes goods with high price volatility such as a food and energy, as they are often not representative of relative price changes. The CPI for all urban consumers (CPI-U) includes food and energy, and is thought to be representative of 93 percent of the non-institutional population of the United States. Releases of new CPI data are closely scrutinized in the U.S. as the index is the primary indicator of inflation in the United States and hence influences financial decisions on many levels.
The Consumer Price Index is often used as a measure of changes in the cost of living. Although it serves well as a rough estimate in this context, it is not completely accurate. Consumers tend to react to price changes immediately, often by substituting more expensive goods with cheaper ones. As the CPI is based on the prices from the past, it does not take this factor into consideration. The Chained Consumer Price Index (C-CPI-U) was introduced in 2002, and while based on the same basket of goods, it also measures the prices of substitute items. It is hence considered to be a more accurate indicator of the actual cost of living.
The price level in the United States increased more dramatically between 2021 and 2022. Given the slow growth of real annual wages, and continuing high levels of inflation, U.S. households can expect to continue to feel the squeeze of high inflation in 2022.
The Consumer Price Index
The Consumer Price Index (CPI) computes thousands of price indices compiled by averaging prices of goods and services across urban or metropolitan areas into a "basket" and comparing this aggregate value to a base value. The CPI basket includes food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.Measurements of CPI can comes in varying forms to provide more accurate measures of different price patters. The core CPI index, for example, excludes goods with high price volatility such as a food and energy, as they are often not representative of relative price changes. The CPI for all urban consumers (CPI-U) includes food and energy, and is thought to be representative of 93 percent of the non-institutional population of the United States. Releases of new CPI data are closely scrutinized in the U.S. as the index is the primary indicator of inflation in the United States and hence influences financial decisions on many levels.
The Consumer Price Index is often used as a measure of changes in the cost of living. Although it serves well as a rough estimate in this context, it is not completely accurate. Consumers tend to react to price changes immediately, often by substituting more expensive goods with cheaper ones. As the CPI is based on the prices from the past, it does not take this factor into consideration. The Chained Consumer Price Index (C-CPI-U) was introduced in 2002, and while based on the same basket of goods, it also measures the prices of substitute items. It is hence considered to be a more accurate indicator of the actual cost of living.
Price level in the U.S.
Consumer prices in the United States have been rising continuously in the last five decades, and areexpected to continue this trend through 2028. The only exception was the financial crisis in 2009 when the prices declined for the first time since 1955.The price level in the United States increased more dramatically between 2021 and 2022. Given the slow growth of real annual wages, and continuing high levels of inflation, U.S. households can expect to continue to feel the squeeze of high inflation in 2022.
