Markets · 6 pages · 12 min

How the consumer price index is a basket

The consumer price index tracks the cost of a defined household basket, not a personal bill.

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From the opening

The consumer price index measures how the cost of a defined basket of goods and services changes over time. Statistical agencies choose the items and the weights to represent how a broad urban population spends, and the index is the basket's cost compared with a base period. The opening covers weights follow how people spend, heavy items move the index more, and the basket is not your receipt.

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Inside

Weights follow how people spend
Heavy items move the index more
The basket is not your receipt
Other indexes use other baskets
Where the idea stops applying
A distinction worth keeping

Sources

Consumer price index basket
Headline versus core inflation

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How the consumer price index is a basket

From the opening

Inside

Sources

Also on the desk