Editing Consumer price index (section)

==Calculation==
[[File:How is the Consumer Prices Index (CPI) calculated?.png|thumb|How is the Consumer Prices Index (CPI) calculated?]]
=== For a single item ===
<math>\text{consumer price index} =\frac{\text{market basket of desired year}}{\text{market basket of base year}} \times \text{100}
</math>

or

<math>\frac{\text{CPI}_2}{\text{CPI}_1}= \frac{\text{price}_2}{\text{price}_1} </math>
:''Where 1 is usually the comparison year and CPI<sub>1</sub> is usually an index of 100.''

Alternatively, the CPI can be performed as <math>\text{CPI} = \frac{\text{updated cost}}{\text{base period cost}} \times 100</math>. The "updated cost" (i.e. the price of an item at a given year, e.g.: the price of bread today) is divided by that of the initial year (the price of bread in 1970), then multiplied by one hundred.<ref>{{cite web |url=http://student.education2020.com/activities/lecture.aspx?keystr=12362&order=06010210&stbl=2196464 |website=Education 2020 Homeschool Console |title=subject Economics, lecture "Inflation" |url-access=subscription}} Formula described within.</ref>{{Better source needed|date=April 2024}}

=== For multiple Items ===
Many but not all [[price index|price indices]] are weighted averages using weights that sum to 1 or 100.

Example: The prices of 85,000 items from 22,000 stores, and 35,000 rental units are added together and averaged. They are weighted this way: housing 41.4%; food and beverages 17.4%; transport 17.0%; medical care 6.9%; apparel 6.0%; entertainment 4.4%; other 6.9%. Taxes (43%) are not included in CPI computation.<ref>Bloomberg Business News, Social Security Administration</ref>{{Full citation needed|date=April 2024}}

<math> \mathrm{CPI} = \frac{\sum_{i=1}^{n} \mathrm{CPI}_i\times\mathrm{weight}_i}{\sum_{i=1}^{n} \mathrm{weight}_i}</math>

where the <math>\mathrm{weight}_i</math> terms do not necessarily sum to 1 or 100.