What is inflation?
Inflation is a general increase in the level of prices of goods and services in an economy over time. When inflation rises, each unit of currency buys fewer goods and services — so the purchasing power of money falls. Inflation is usually expressed as an annual percentage rate (e.g., 3% inflation means prices are 3% higher than a year earlier).
What is the Consumer Price Index (CPI)?
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a fixed basket of goods and services. It tracks hundreds of categories — food, housing, transportation, medical care, and more — and is the most widely used gauge of inflation in the United States. The U.S. Bureau of Labor Statistics (BLS) publishes the CPI monthly.
What is CPI-U?
CPI-U stands for Consumer Price Index for All Urban Consumers. It is the most commonly cited U.S. inflation measure and covers about 93% of the U.S. population (all urban households). The BLS also publishes CPI-W (Urban Wage Earners and Clerical Workers), a narrower subset. When people say "the CPI" or "headline inflation" in the U.S., they usually mean CPI-U.
What is year-over-year (YoY) inflation?
Year-over-year inflation is the percentage change in prices compared to the same month or period one year earlier. For example, if the CPI in January 2025 is 3% higher than in January 2024, year-over-year inflation is 3%. YoY is less volatile than month-over-month measures and is the standard way to report and compare inflation rates.
What is month-over-month (MoM) inflation?
Month-over-month inflation is the percentage change in prices from one month to the next (e.g., January to February). MoM rates can be noisy because of seasonal factors or one-off price moves. Often they are reported as seasonally adjusted. Annual inflation is not the same as 12 times the latest MoM rate; it is the change over the full prior 12 months.
What does “inflation-adjusted” or “real” mean?
Inflation-adjusted (or "real") values are corrected for inflation so that dollar amounts from different years can be compared in terms of purchasing power. For example, $50,000 in 2019 might be equivalent to about $60,000 in 2024 after inflation — so we say $60,000 in 2024 is the inflation-adjusted (real) equivalent of $50,000 in 2019. Our inflation calculator does this conversion using BLS CPI-U.
What is nominal vs. real?
Nominal means the actual dollar (or currency) amount — not adjusted for inflation. Real means adjusted for inflation so that purchasing power can be compared across time. For example, a "nominal" salary of $60,000 in 2024 might have the same "real" purchasing power as $50,000 in 2019 if inflation was 20% over that period.
What is deflation?
Deflation is a sustained decrease in the general price level — in other words, negative inflation. When deflation occurs, the purchasing power of money rises (each dollar buys more). Deflation is less common than inflation in modern economies and can be associated with weak demand or financial stress. Some individual categories (e.g., electronics) can fall in price even when overall inflation is positive.
What is purchasing power?
Purchasing power is the quantity of goods and services that can be bought with a given amount of money. When inflation rises, purchasing power falls — your dollars buy less. When we say "keep up with inflation," we mean maintaining the same purchasing power (e.g., a raise that matches inflation so your real income doesn't fall).
How is inflation calculated?
Inflation is calculated from a price index such as the CPI. The index tracks the cost of a fixed basket of goods and services over time (e.g., set to 100 in a base period). The inflation rate is the percentage change in that index over a given period — for example, (Index this year − Index last year) ÷ Index last year × 100. The BLS collects thousands of prices each month to compute the U.S. CPI.
Where does your data come from?
For U.S. inflation and our calculators we use the Bureau of Labor Statistics (BLS) CPI-U, All Urban Consumers, U.S. City Average. For our global inflation table we use the OECD and national statistical offices. Details and other sources (e.g., for food, rent, gas) are on our Methodology page.
How do I compare prices across years?
Use an inflation calculator that converts a dollar amount from one year into the equivalent in another year based on the CPI. Our inflation calculator lets you enter an amount and two years and shows the equivalent purchasing power. For salaries, our salary calculator shows what a past salary is worth in today's dollars and how much of a raise you'd need to keep up with inflation.
Why do inflation rates differ by country?
Inflation differs by country because of different monetary and fiscal policies, demand and supply conditions, exchange rates, and shocks (e.g., energy, food). In addition, each country measures inflation with its own consumer basket and methods, so cross-country comparisons are not exact. We show a global inflation comparison table with a note on these caveats.