Consumer Price Index (CPI)
- Invert the procedure to compute real GDP and now quantities instead of prices! A more direct way to measure inflation.
- Differences between CPI and GDP deflator
- Kinds of goods included (bought by consumers vs produced domestically)
- Weights
- CPI and PPI are done by Bureau of Labor Statistics, GDP is done by Bureau of Economic Analysis
- CPI-inflation is typically more volatile than GDP-deflator-inflation, e.g. oil, which is often imported, and not included in GDP
- Two variants
- Headline inflation: all goods and services included
- Core inflation: food and energy excluded, which tend to be highly volatile