Official CPI: Does it accurately reflect inflation? "The
Consumer Price Index (CPI) is a measure of the average change
over time in the prices of goods and services that people buy.
The CPI is a complex construct that combines economic theory
with sampling and other statistical techniques and uses data
from several surveys to produce a timely and precise measure of
average price change for the consumption sector of the American
economy. The CPI measures the change in the retail prices of
approximately 80,000 specific goods and services, called the
market basket. The goods and services fall into eight major
categories: food and beverage, housing, apparel, transportation,
medical care, recreation, education and communication, and
other." The CPI started being measured in 1919 but really caught
on after WWII. For most of that time the BLS used a formula
called the Laspeyres formula which measures the change in the
cost of a fixed market basket of goods and services. CPI is used
as a basis for almost everything.