Understanding CPI Index: Calculating Percentage Change & Economic Significance

The Consumer Price Index is a measure of overall price levels for goods and services in an economy. The index represents the average price paid for a group of 200 goods and services and is released monthly by the Bureau of Labor Statistics. Economists use the CPI as an economic indicator and to adjust the value of other indices. The CPI is also used to adjust the cost of living for consumer payments such as Social Security and other government benefits.

Data and Calculation

Go to the BLS website to find data on the value of the index at the particular times you want to measure. Plug your values into the following equation:

Percent change in CPI = (end value of index - start value of the index) / start value of the index x 100

Example

If you want to calculate the percent change in CPI between December 2013 and December 2014, you can go to the BLS website to find the CPI was 233.049 in December 2013 and 234.812 in December 2014. Find the percent change using the following equation:

Percent change in CPI = (234.812 - 233.049) / 233.049 x 100

The percent change in the CPI between December 2013 and December 2014 was 0.756%.