The inflation rate measures the pace of price increases for a set of goods and services. A higher rate indicates prices are rising more quickly than in the past, while a lower one indicates they’re growing more slowly. The government tracks price changes through a monthly consumer price index, or CPI, which is published by the Bureau of Labor Statistics.
The CPI includes a wide variety of items, from eggs to motor fuel to haircuts and college textbooks. But because food and energy prices tend to be highly volatile due to weather or geopolitical events, policymakers focus on what’s known as core inflation. This figure excludes the prices of foods, energy, and a few other categories that are more likely to fluctuate from one month to the next. The resulting calculation is intended to provide a clearer picture of long-term trends in prices for most consumers.
Inflation rates vary by country, region and even city. The USAFacts team analyzes standardized data from the CPI and other sources to make it easier for you to compare the costs of living across cities, states and the nation.
Relative prices are vital to the economy, transmitting information about consumption, production and labor needs to everyone in a market society. But when prices rise unevenly, people can lose purchasing power, and their economic choices will be distorted. This is “inflation,” and it usually results from two main factors: