CPI(A), CPI(B), and CPI(C) are distinct Consumer Price Indices compiled (specifically in Hong Kong) to measure inflation across different household expenditure ranges, providing a more detailed picture of price changes than a single, aggregate index.
The CPI-U includes expenditures by urban wage earners and clerical workers, professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, retirees and others not in the labor force. The CPI-W includes only expenditures by those in hourly wage earning or clerical jobs.
All told, an increase in CPI means that a household has to spend more dollars to maintain the same standard of living; that's mostly bad for the households, but it can be good for businesses and the government.
When CPI rises by 3%, it means that this basket of goods costs 3% more than a year ago. When it falls, we see deflation. For example, a loaf of bread that cost £1 last year would cost £1.03 today if it inflated in price by 3%.
How to Calculate the Consumer Price Index (CPI) and Inflation Rate
Which CPI is most common?
Introduced in 1978, the CPI-U is the most widely used CPI measure in popular media and understanding. Its sampling is designed to represent the consumption baskets of residents of urban and metropolitan areas, which collectively account for over 90 percent of the US population.
If the ratio has a value higher than 1 then it indicates the project is performing well against the budget. A CPI of 1 means that the project is performing on budget. A CPI of less than 1 means that the project is over budget.
A CPI greater than “1” signals a project humming efficiently below budget. A CPI of exactly “1” marks perfect alignment with planned costs. A CPI below “1” rings the alarm for overspending.
The current CPI rate depends on the country, but for the UK, it was 3.2% in November 2025, while for the US, the latest figure (December 2025) was 2.7% for All Urban Consumers (CPI-U). The UK rate has been easing, while the US figure shows a slight decrease from the prior month but remains above the Bank of England's 2% target, with forecasts suggesting further drops in 2026.
Inflation benefits those with high debt because they repay in inflated money. This helps people with large mortgages on their large, expensive houses more than people who rent or who have small, less expensive houses with small mortgages.
Specifically, the CPI measures the average change in price over time of a market basket of consumer goods and services. The market basket includes everything from food items to automobiles to rent.
$1,000 in 2000 is equivalent in purchasing power to about $1,882.24 today, an increase of $882.24 over 26 years. The dollar had an average inflation rate of 2.46% per year between 2000 and today, producing a cumulative price increase of 88.22%.
Based on speed, there are 4 different types of inflation – hyperinflation, galloping, walking, and creeping. When the inflation is 50% a month, then it leads to hyperinflation. This happens very rarely, some of the examples are Venezuela in the recent past, Zimbabwe in the 2010s and Germany in 1920s.
When a country publishes a CPI report, the results are expressed as the percentage of change compared to the previous issue. If the result is positive, the consumer prices have increased, and the inflation rate is rising. In the opposite scenario, the consumers would be paying less, and inflation would be decreasing.
If the CPI is greater than 1, it means the project is under budget, while a value less than 1 indicates that the project is over budget. For example, if the CPI is 0.9, it means that the project has spent $0.90 for every $1 of work that was scheduled to be completed.
The Fed may respond by raising interest rates to make borrowing more expensive, slowing spending and cooling the economy. If CPI is too low, the Fed might lower interest rates to encourage spending and investment. In this way, CPI acts as an economic thermostat, helping the Fed keep price growth steady and predictable.
“Today's ONS figures show that annual CPI inflation recorded 3.8% in September 2025, unchanged from August and lower than anticipated. We expect inflation to remain above 3% through the first quarter of 2026 before gradually falling towards the 2% target.
With a CPI of 1.2, it means for every pound spent, £1.20 of value is being created. This implies that the project is under budget. This is an indication that the resources are being put to effective use, and the project performs better financially than it is expected. Master the art of precise project planning!
A higher CPI and higher inflation rate mean that the same products cost consumers more money to buy the same products now than it did in the past. Higher CPI also means that consumers' dollars have less purchasing power, and workers' wages have less value.
The CPI calculation formula divides the cost of the current basket of goods by the cost of the same basket in a base period, then multiplying the result by 100.
