What is the inflation rate?
What this series shows
When people ask what the inflation rate is, this is almost always the number they mean: the twelve-month change in the consumer price index — the figure normally meant by “inflation is running at X percent”. It is computed here from the published index level against the same month a year earlier.
The comparison figures above are the direction of travel. A rate that is lower than it was a year ago means prices are still rising, only more slowly — inflation falling is not the same as prices falling, and it is the single most common misreading of this number.
Two cautions. This is the headline index, not core: it includes food and energy, which are volatile enough to move the number without indicating a change in trend. And it is not the index the Federal Reserve targets. The 2% objective is defined on the price index for personal consumption expenditures, which weights spending differently and generally runs somewhat below CPI.
What that money is worth now
Price level only. It says what the same basket costs, not what anything in particular does.
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An illustration, not advice.