How to Calculate CPI

The Consumer Price Index (CPI) is a measure of changes in product costs over a specific time period and involves census data, consumer surveys and rating the products by importance. To calculate a simple CPI, you need only to have a reference period, a new period and the costs of items you use. This guide will help you see how inflation affects your day-to-day expenses.

Steps

Single Item

1. Choose one item you purchased in the past. Try to find something that you have an exact number for, and that you have recently purchased as well. This product will be your reference CPI. Write down the price and reference CPI. The starting CPI is always 100:
   
   
   
   
   
   
   
   
   
   • Price 1: $1.50
   
   
   • CPI 1: 100 (1.50 / 1.50 x 100)


2. Write down the new price. This is the price you currently pay for the same item:
   
   
   
   
   
   
   
   
   
   • Price 2: $1.75


3. Calculate the new CPI. Divide Price 2 by Price 1. Multiply by 100:
   
   
   
   
   
   
   
   
   
   • 1.75 / 1.50 x 100 = 116.6
   
   
   • CPI 2: 116.6


4. Subtract CPI 1 from CPI 2. This will give you the percentage change in price since you purchased the original product. If it is a positive number, you are experiencing inflation. If the number is negative, then you are experiencing deflation:
   
   
   
   
   
   
   
   
   
   • 116.6 - 100 = 16.6% inflation

Multiple Items

1. Choose multiple items that you purchased in the past. Pick items that you purchased around or at the same time. Make sure that they’re items that you have purchased again recently. Write down the price you paid for each item and the reference CPI. The reference CPI is always 100. Then add the prices together:
   
   
   
   
   
   
   
   
   
   • Price 1: $3.25, $3.00, $0.75
   
   
   • Price 1: 3.25 + 3.00 + 0.75 = 7.00
   
   
   • CPI 1: 100 (7.00 / 7.00 x 100)


2. Write down the new prices. These are what you currently pay for each of the same items. Then add the prices together:
   
   
   
   
   
   
   
   
   
   • Price 2: $4.00, $3.25, $1.25
   
   
   • Price 2: 4.00 + 3.25 + 1.25 = 8.50


3. Calculate the new CPI. Divide Price 2 by Price 1 and multiply by 100.
   
   
   
   
   
   
   
   
   
   • 8.50 / 7.00 x 100 = 121
   
   
   • CPI 2: 121.


4. Subtract CPI 1 from CPI 2. This will give you the percentage change in price since you purchased the original products. The more products you can calculate the CPI change of, the more accurate your overview of the economy will be:
   
   
   
   
   
   
   
   
   
   • 121 - 100 = 21% inflation

Things You'll Need

• Note pad


• Calculator


• Pen or pencil


• Product receipts from two reference points (such as 1 year ago and currently)

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