What is the Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measure that tracks the average price change of a fixed basket of goods and services that households buy. It's the main indicator for inflation.

How is the CPI calculated?

Statistical agencies collect prices of thousands of products and services every month. Together, these form a "consumer basket" representative of what an average household buys.

The consumer basket

The basket contains hundreds of products and services, divided into categories:

  • Food and beverages (bread, milk, meat, etc.)
  • Clothing and footwear
  • Housing (rent, energy, maintenance)
  • Home furnishings and household appliances
  • Healthcare
  • Transport (car, fuel, public transport)
  • Communication (phone, internet)
  • Recreation and culture
  • Education
  • Hospitality (restaurants, cafes, hotels)
  • Other goods and services

Weighting

Not all products count equally. Products that households spend a lot of money on (like housing and energy) have a greater weight than products with lower spending. These weightings are regularly adjusted based on actual spending patterns.

From CPI to inflation

The CPI itself is an index number with a base year (for example, 2015 = 100). Inflation is calculated by measuring the percentage change in the CPI:

Example: If the CPI in January is 120 and in January of the previous year it was 115, then inflation is: ((120 - 115) / 115) × 100 = 4.3%

Different types of CPI

Regular CPI

The standard consumer price index that includes all price changes, including tax changes.

Derived CPI

A special version where the effect of changes in indirect taxes (such as VAT and excise duties) has been filtered out. This provides a clearer picture of actual price development.

Core CPI

Also called "core inflation". This excludes volatile components like energy and food to get a more stable picture of the underlying inflation trend.

Limitations of the CPI

Although the CPI is the best available indicator, it has limitations:

  • It's an average - individual experiences may differ
  • The basket is periodically adjusted, which complicates comparisons over long periods
  • Quality improvements are difficult to include in the calculation
  • New products and services are only added later
  • Regional differences aren't always well reflected

CPI in practice

The CPI is used for:

  • Indexation of wages, benefits and pensions
  • Monetary policy of the European Central Bank (ECB)
  • Economic analyses and forecasts
  • Adjustment of rent prices and contracts
  • Comparison between countries and regions

View the figures

On this website, you'll find current CPI figures and inflation percentages for many countries worldwide. Use the inflation calculator to calculate what price changes mean for your purchasing power.