The Consumer Price Index (CPI), calculated by the Bureau of Labor Statistics (BLS), measures the monthly change in price for a figurative basket of goods and services. These items can change over time. CPI is a weighted average of prices and is representative of aggregate consumer spending. It is used as a metric for inflation and deflation. The CPI accounts for substitution effects—consumers' tendency to shift spending away from products and product categories that have grown relatively more expensive with time.

In our opinion CPI is only a fraction of the whole picture of real inflation and might be understated compared to reality. It still remains a valuable indicator of the general price level and inflation trends in an economy.