The consumer price index measures the average change over time in the prices consumers pay for a representative basket of goods and services, according to the Bureau of Labor Statistics. The bureau publishes the October index on Tuesday, Nov. 10, at 8:30 a.m. ET.

It is an average. Your own bills may move faster or slower.

Whose prices it tracks

The headline index, called CPI-U, covers all urban consumers, more than 90 percent of the U.S. population. It leaves out people in rural areas outside metropolitan areas, farm households, people on military installations and people living in institutions.

A second index, CPI-W, covers urban wage earners and clerical workers, about 30 percent of the population.

What goes in the basket

The basket has more than 200 categories in eight major groups: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.

Some taxes are in it. Sales and excise taxes tied to specific purchases count, and so do government user fees such as tolls, vehicle registration and water bills. Income taxes and Social Security taxes do not.

Investments are not in it. Stocks, bonds, real estate and life insurance are left out.

Tips are generally excluded. A mandatory service charge is included.

How each item is weighted

Not every item counts the same. The weights come from the Consumer Expenditure Surveys, which ask households what they actually spend.

For example, the weights in the 2023 index came from 2021 survey data, when more than 20,000 consumer units gave quarterly interviews and about 12,000 kept two-week spending diaries.

How prices are collected

The bureau records prices for about 80,000 items each month. As of 2023, about 16 percent of those price quotes, not counting rent, came from online sellers.

Prices are gathered across the whole month in three periods, roughly the first, second and third 10 days. The index is an estimate for the month as a whole, not a single day. Gasoline prices have come from a secondary data source since June 2021.

How to read the number

The index is set so that prices in 1982 through 1984 equal 100. An index of 110 means prices are 10 percent higher than in that base period.

The bureau says percent changes are more useful than index points. The all-items index is the headline figure. "Core" removes food and energy, because those prices swing widely.

Why yours can differ

The bureau is direct about this. "The CPI does not necessarily measure your own experience with price change," it says. The national average seldom mirrors any one consumer's experience.

The reason is the weights. The index weights each category by what the average urban household spends on it. Your household has its own weights.

Example: a household that spends a larger share of its budget on medical care than the average household is more exposed to medical prices. If medical prices rise faster than other prices, that household's personal inflation rate runs above the index.

Another example: a renter whose rent rises while grocery bills stay flat. That household's inflation comes almost entirely from rent, so its personal rate depends on how large a share of its budget the rent takes.

Two other limits apply. The CPI is not a complete cost-of-living index. It also does not compare living costs between cities. A local index measures change over time in that area only.

Why it matters to your income

The index moves real money. It adjusts Social Security payments, the federal income tax structure, eligibility for food assistance through SNAP, and many union contracts. The bureau says it affects the income of more than 108 million people, including more than 67 million Social Security beneficiaries and more than 41 million SNAP recipients.

The Social Security cost-of-living adjustment uses CPI-W. It is the percent increase between the third-quarter average CPI-W and the previous peak third-quarter average.

CPI-U and CPI-W are final when issued and are not routinely revised. Seasonally adjusted figures can be revised for up to five years.