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Consumer Price Index (CPI) Calculator

This calculator requires the use of Javascript enabled and capable browsers. This calculator is designed to give related information to the Consumer Price Index (CPI). This inflation calculator is based on the average inflation index during the calendar year. This inflation calculator will compute inflation rates from and to any of the range of years provided. CPI represents changes in prices of all goods and services purchased for consumption by urban households. User fees (such as water and sewer service) and sales and excise taxes paid by the consumer are also included. Income taxes and investment items (like stocks, bonds, and life insurance) are not included. This information is gleaned from government statistics and provided as information only. We make no guarantees as to the accuracy of the government information. The CPI, calculated by the Bureau of Labor Statistics, is called an inflation indicator. Indeed, published every month, the CPI is the most important inflation indicator in the United State. The way it is calculated is pretty simple, yet it serves a very important purpose. The CPI is an estimation of the price changes for a typical basket of goods. In other words, the prices of everyday goods such as housing, food, education, clothing, and other items, are compared from one month to the next and the difference represents the CPI. Of course the goods are weighted appropriately in order to get an accurate measure. (For example food counts more than education since it is one of the main daily spending.) There are 8 major categories of items considered in the CPI, with roughly 200 total selections. The major groups are listed with a few selections from each.

FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
APPAREL (men's shirts and sweaters, women's dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
RECREATION (televisions, pets and pet products, sports equipment, admissions)
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories)
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses)

If the index number rises excessively, it means that the cost of living is rising and therefore we have inflation, which in turn causes the Federal Reserve to take appropriate measures to control it. Having said that, it is important not to get too concerned about the monthly changes in the CPI. Rather, as a whole, we must look at the changes over a longer period such as a few months or a year. This is important because seasonal price changes tend to cause temporary fluctuation in the price of goods without necessarily creating inflation! As much as the Index tries to adjust for those changes it is better to look at the CPI over a long period of time such as one year to get the most accurate inflation reading. (Our index figure used in this calculator is the average of the 12 reported monthly figures, for the year's figure.) The CPI is used by the federal reserve when deciding the changes that need to be made to the interest rates as well as by investors when trying to predict the future price of securities. Indeed, when inflation is rising, it causes people to buy less goods, therefore reducing the profits of major companies (such as Ford, Wal-Mart, and similar). This loss of profit in turns causes the company's stock prices to drop as well. This shows how important it is to monitor the Consumer Price Index whether you are an individual investor, a member of the federal Reserve Board or simply someone who is trying to estimate future costs and spending. The CPI is reported monthly by the government, however, it is often adjusted, as far back as several years based on new information. Our data is adjusted as we get new information from the government. The 2005 CPI is based on the average monthly figures until the annual figure is posted.

To use the CPI Calculator, enter a cost, valued in your From (Base) year. Select both the From year and the To year for the calculation. Click on Calculate (or any other box) and the CPI information will be returned. You may change a value and recalculate or click on Clear Values to start over. For the years in our database, if you wish to see what a dollar in 1930 was worth is 2000, enter $1.00 as the Exemplary Cost, 1930 in the From (Base) and 200 in the To (Target). Then click on Calculate.

CPI Values Calculator
CPI Required Data Entry
Exemplary Cost Dollars
From (Base) Calendar Year
To (Target) Calendar Year
Calculated CPI Results
From Index Value For The Year
To Index Value For The Year
Inflation Index Factor
Change Percent
Inflated Cost Dollars

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