Consumer Price Index (CPI)
The Consumer Price Index (CPI) is the most publicized and widely used measure of the general level of prices in the U.S. economy. The CPI measures the average change over time in the prices paid by urban consumers for a representative market basket of all consumer goods and services.
The CPI for food is a component of the all-items CPI. While the all-items CPI measures the price changes for all consumer goods and services, including food, the CPI for food measures the changes in the retail prices of food items only.
The CPI for food at home is a component of the full CPI and is the principal indicator of changes in retail food prices. Policymakers, both public and private, closely follow the CPI for food consumed at home and its changes, which measure price inflation for food items. The CPI for food consumed at home also affects policy evaluation because the effects of many current and proposed policies are evaluated based on CPI measures. To contribute to the analysis of government and commercial decision makers, ERS estimates the future direction of changes in the CPI for all food, food at home, and food away from home (see Food Price Outlook).
Forecasting the CPI for food has become increasingly important due to the changing structure of food and agricultural economies and the important signals the forecasts provide to farmers, processors, wholesalers, consumers, and policymakers.
The food price level can be influenced by changes in costs incurred by food system firms. Changes in input costs can translate directly into changes in the CPI or may have little or no effect. Researchers at ERS not only produce forecasts of the CPI but also analyze the impact of economic factors on changes in the CPI.