What is a consumer price index?
A measure of inflation, and a tool to guide central bankers
INFLATION HAS DOGGED societies for centuries. Attempts to measure it properly began in earnest in the 20th century. In 1914 the British government calculated a “working-class cost of living index” to help guide adjustments to the wages of essential workers during the first world war. America’s Bureau of Labour Statistics (BLS) published inflation measures for 32 cities in 1919, and followed up with a national index in 1921. How do such consumer price indices work—and how have they changed over the years?
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