How Do You Calculate Consumer Price Index?
A consumer price index (CPI) is an estimate as to the price level of consumer goods and services in an economy which is used as a way to estimate changes in prices and inflation. A CPI takes a certain basket of common goods and services, for instance a gallon of gas, a loaf of bread and a haircut, and tracks the changes in the prices that basket of goods over time. Select a base year for the consumer price index. The PCI of the base year is always set to 100. Select a basket of goods and add the prices of all the goods in your base year. For instance, if you choose 2000 as your base year and choose a gallon of gas, a loaf of bread and a haircut as your basket of goods, add the prices of these three goods in the year 2000. Select the year for which you want to calculate the CPI and add the prices of all the goods in your basket of goods for that year. For instance, if you want to calculate CPI in 2005 using the basket of goods in the example, add the prices of a gallon of gas, a loaf of
