Consumer Price Index (CPI)

The consumer price index (CPI) measures changes through time in the price level of consumer goods and services purchased by households. In the United States, the CPI is defined by the United States Bureau of Labor Statistics as “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.” The CPI-U, or the Consumer Price Index for all Urban Consumers is used to adjust the principal of a Treasury Inflation-Protected Security (TIPS) and to determine the inflation rate component of the I Bond interest rate.