Consumer Price Index (CPI)

How It Works

The Consumer Price Index is the most widely cited measure of inflation in the United States. The BLS collects approximately 94,000 price quotes each month from about 23,000 retail establishments and 43,000 rental housing units across 75 urban areas. The CPI-U (Consumer Price Index for All Urban Consumers) covers approximately 93% of the U.S. population. Food accounts for roughly 13.5% of the CPI basket, split between food at home (about 8.3%) and food away from home (about 5.2%). The Cheeseburger Index uses a subset of CPI data — the Average Price Data program — which tracks actual dollar prices rather than index values, giving a concrete cost figure for each ingredient. The CPI is used to adjust Social Security payments, federal tax brackets, and millions of private contracts. When the CPI rises by 3%, it means the average consumer needs 3% more income to maintain the same standard of living.

Related Terms

• BLS Average Price Data — A BLS program that reports actual dollar prices (not index values) for approximately 70 food items at the national and regional level, published monthly — the primary data source for the Cheeseburger Index.
• Basket of Goods — A fixed set of consumer products and services used to measure price changes over time — the CPI basket contains about 80,000 items, while the Cheeseburger Index uses a basket of 5 burger ingredients.
• Food Inflation — The rate at which food prices increase over time, measured as a percentage change in the food component of the CPI — historically averaging 2-3% annually but spiking to 11.4% in 2022.
• Real vs. Nominal Prices — Nominal prices are the actual dollar amount you pay today; real prices are adjusted for inflation to compare purchasing power across different time periods.