The Consumer Price Index, or CPI, is not a list of the prices of goods you buy. Think of it instead in terms of the familiar stock market index—as a general indicator of the changes in a basket of common goods and services. Like the stock market index, it’s been around a while.
The US began studying family expenditures in the late 1800s. By 1919, the Bureau of Labor Statistics (BLS) was measuring the price level of consumer goods and services using a program called the Cost of Living Index.
The program, later updated and renamed the Consumer Price Index for Urban Wage Earners and Clerical Workers, expanded to include not only consumer goods and services, but items such as transportation, medical care, recreation, education, and communication. The statistics, released on a monthly basis, reflect the general spending of a typical urban household.
The BLS continued to revise the CPI periodically, and in 2002 began publishing the results of a more comprehensive program called the Chained Consumer Price Index for All Urban Consumers. The Chained CPI includes the effects of substitutions you make when prices rise, for instance buying one type of meat instead of another.
The BLS routinely publishes a variety of CPI indexes, though you’re most likely familiar with the All Items Consumer Price Index for All Urban Consumers. That’s the most expansive index, and the one typically reported by the media.