The consumer price index, or CPI, tracks the average change over time in the prices urban US consumers pay for a fixed, weighted basket of goods and services, from rent and groceries to car insurance and haircuts. The Bureau of Labor Statistics (BLS) publishes it monthly as an index level, not a percentage, with the 1982-84 average set at 100. The inflation rates quoted in the news are percentage changes in that level, usually over 12 months. Stocks, bonds and other investments sit outside the basket, because they are savings rather than day-to-day spending. This entry covers how BLS builds the index, the arithmetic, the versions you will see quoted and the misreadings to avoid; the Treasuries hub covers the inflation-linked securities that depend on it.
How does the BLS build the CPI?
BLS collects prices every month, files them into thousands of small item-and-place indexes, and averages those with weights drawn from what households actually spend.
Collection runs in 75 urban areas, from about 22,000 retail and service establishments and roughly 6,000 housing units, according to the technical note in the September 2026 release. Recorded prices include taxes tied to a purchase, such as sales and excise taxes and user fees like tolls. BLS divides consumer spending into 243 basic items and the country into 32 index areas, giving 7,776 basic indexes; electricity in the Philadelphia area is one of them.
The calculation then runs in two stages:
- Inside each basic index, most items are combined with a geometric mean of price changes, which allows for shoppers drifting toward items whose prices rise less. A short list of strata uses a modified Laspeyres formula instead.
- Across the basic indexes, BLS uses a modified Laspeyres formula weighted by spending from the Consumer Expenditure Surveys. The weights stay fixed for a year and are replaced with each January index: the 2026 indexes use 2024 spending, and the next update is due in February 2027.
Each series is then stated relative to its reference base. For the CPI-U and CPI-W that is the 1982-84 average, so a reading of 107.000 would mean prices 7% above that base.
| Major group | Share of CPI-U | Share of CPI-W |
|---|---|---|
| Housing (shelter alone) | 44.5% (35.6%) | 42.7% (33.6%) |
| Transportation (motor fuel alone) | 16.3% (3.0%) | 18.3% (4.1%) |
| Food and beverages | 14.5% | 15.6% |
| Medical care | 8.4% | 7.6% |
| Education and communication | 5.8% | 5.9% |
| Recreation | 5.1% | 4.4% |
| Other goods and services | 2.9% | 2.9% |
| Apparel | 2.4% | 2.7% |
These are the relative importance figures for December 2025, built on 2024 weights. Owners' equivalent rent, an estimate of what homeowners would pay to rent their own homes, is the largest single item at 26.2% of the CPI-U. The weights also explain gaps between versions: energy makes up 8.1% of the CPI-W against 6.4% of the CPI-U, which helps explain why, with energy prices up 20.4% in the year to September 2026, the CPI-W rose 3.9% while the CPI-U rose 3.7%.
How do you calculate inflation from the CPI?
Divide the later index reading by the earlier one, subtract 1 and multiply by 100; the result is the percentage change in prices between the two months.
Inflation rate (%) = (later CPI ÷ earlier CPI − 1) × 100
The same ratio moves dollar amounts between dates: multiply an old amount by the later index over the earlier index to restate it in later prices. Use the not seasonally adjusted series for comparisons a year or more apart, and keep the seasonally adjusted series for month-to-month trends.
Worked example: Annual inflation to September 2026
BLS published the September 2026 CPI-U on October 14, 2026.
- CPI-U for September 2026: 336.940. CPI-U for September 2025: 324.800
- Ratio: 336.940 ÷ 324.800 = 1.037377
- Inflation: (1.037377 − 1) × 100 = 3.74%, published as 3.7% after rounding
- In dollars: a $50,000 salary in September 2025 had to reach 50,000 × 1.037377 = $51,868.84 a year later to buy the same basket
- Against the base: 336.940 ÷ 100 = 3.37, so prices stood at about 3.37 times their 1982-84 average
Worked example: How the CPI-W set Social Security's 2027 raise
The Social Security Act compares third-quarter averages of the CPI-W, rounded to the nearest tenth of a percent.
- July to September 2026: 327.104, 328.481 and 330.654, averaging 328.746
- July to September 2025: 316.349, 317.306 and 318.139, averaging 317.265
- Increase: (328.746 − 317.265) ÷ 317.265 × 100 = 3.62%, which rounds to 3.6%
- Result: benefits rise 3.6% starting with December 2026 benefits, paid in January 2027, so a $2,000 monthly benefit grows by about $72
How do CPI-U, CPI-W, chained CPI and core CPI differ?
They price the same goods but differ in whose spending sets the weights, which formula combines the prices and whether food and energy are left out.
| Version | Whose spending | How prices are combined | 12 months to Sept 2026 | Main uses |
|---|---|---|---|---|
| CPI-U | All urban consumers, over 90% of the population | Modified Laspeyres, weights fixed for a year | 3.7% | Headline inflation, TIPS, I bonds, many contracts |
| CPI-W | Urban households earning most of their income from clerical or wage jobs, about 30% of the population | Same formula, its own weights | 3.9% | Social Security and SSI cost-of-living adjustments |
| Chained CPI-U | Same people as the CPI-U | Törnqvist formula with monthly weights; preliminary, then revised | 3.5% | Federal income tax brackets and other IRS inflation adjustments |
| Core CPI | CPI-U without food and energy, 79.9% of the basket | Same as the CPI-U | 2.6% | Reading the underlying trend |
The chained index rose less than the CPI-U in the year to September 2026 because its weights follow spending month by month, so it captures shoppers switching toward items whose prices climb more slowly; the fixed-weight Laspeyres version assumes no such switching. Federal tax law uses the chained figure, averaged over the 12 months ending August 31, to move bracket thresholds each year.
The Federal Reserve sets its 2% inflation goal against a different gauge altogether, the Commerce Department's PCE inflation measure, which covers more kinds of spending and weights them differently. CPI readings still move markets, because they arrive about two weeks before the PCE figures for the same month.
Where do you see the CPI in practice?
Beyond the monthly headline, the CPI sets payments on inflation-linked Treasuries, the yearly Social Security raise and federal tax brackets, and it is the yardstick for real returns.
- The monthly release. BLS posts its figures at 8:30 a.m. Eastern, 10 to 14 days after each month ends. The October 2026 report is due November 10, 2026.
- TIPS. The principal of Treasury Inflation-Protected Securities follows the unadjusted CPI-U with a lag: the reference value for the first day of any month is the index from three months earlier, so December 1, 2026 uses September's 336.940.
- I bonds. The inflation part of the rate, reset every May 1 and November 1, is the six-month change in that same index. March to September 2026 produced 2.04% for six months (4.08% annualized), and the I bonds guide shows how it joins the fixed rate.
- Interest rates. Inflation reports shape the Federal Reserve's decisions on the federal funds rate, which in turn steer bill yields, as the guide to Fed decisions and T-bill rates explains.
- Savings. Taking inflation out of a yield gives the real return. The real returns guide works through that math, and the study of T-bill yields vs inflation tests how often 3-month bills beat the CPI since 2000.
The table below lists recent monthly CPI-U levels and their 12-month changes. To check an annual figure yourself, divide the newest index by the one 12 rows down. A blank October 2025 is expected, not an error.
| Month | CPI-U index | Change from a year earlier |
|---|---|---|
| Sep 2026 | 336.940 | +3.7% |
| Aug 2026 | 334.980 | +3.4% |
| Jul 2026 | 333.918 | +3.4% |
| Jun 2026 | 333.952 | +3.5% |
| May 2026 | 335.123 | +4.2% |
| Apr 2026 | 333.020 | +3.8% |
| Mar 2026 | 330.213 | +3.3% |
| Feb 2026 | 326.785 | +2.4% |
| Jan 2026 | 325.252 | +2.4% |
| Dec 2025 | 324.054 | +2.7% |
| Nov 2025 | 324.122 | +2.7% |
| Sep 2025 | 324.800 | +3.0% |
| Aug 2025 | 323.976 | +2.9% |
What do people get wrong about the CPI?
Most misreadings come from treating the index level as a percentage, mixing adjusted with unadjusted figures, or finding meaning in moves smaller than the survey's margin of error.
- Points are not percent. The CPI-U rose 12.14 points in the year to September 2026, but inflation was 3.74%. The same 12-point rise from a lower starting level would be a bigger percentage, which is why BLS reports percent changes.
- Percentage points are not percent either. Annual inflation moving from 3.4% in August to 3.7% in September is a rise of 0.3 percentage point, or 30 basis points, not a 0.3% rise.
- Adjusted and unadjusted get mixed. The 0.6% monthly rise reported for September 2026 is seasonally adjusted; the 3.7% annual rate is not. Adjusted data are revised every February for five years, so contracts and Treasury securities use the unadjusted series.
- City indexes get read as price levels. A higher index for one metro area does not mean it costs more to live there; area indexes measure only change since a common base period.
- Small moves get over-read. BLS puts the standard error of the monthly all-items change at 0.04 percentage point, so it is 95% confident that a published 0.2% rise reflects a true change somewhere between 0.12% and 0.28%.
- October 2026 looks like a normal month. With no October 2025 index, BLS will not publish 12-month changes for October 2026 for most series, so annual comparisons skip from September to November.
- The average gets mistaken for a household's own inflation. The basket reflects average urban spending, so a renter who commutes by car felt more of the 34.2% jump in gasoline prices than a homeowner who takes the train.