How is cost of living calculated?
See how the consumer price index tracks changing prices and what $100 in 2020 buys in September 2026, and learn its limits for local household budgets.
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What is in the price basket?How does inflation change buying power?Can the index compare cities?How can I use inflation for a budget or wage?A consumer price index tracks how prices for a basket of goods and services change over time. It helps describe changes in living costs, but it is not a measure of every household's expenses or the full cost of living.
What is in the price basket?
The consumer price index, or CPI, tracks goods and services urban consumers buy, including food, rent, transportation and medical care. Items are weighted by spending patterns, so a category with a larger share of spending has more influence on the overall index. The index methods explain what is included.
The index is an average. If rent takes a larger share of your budget than it does in the index, your expenses may move differently from the headline figure. The CPI also leaves out some things that affect living standards, so it only approximates a cost of living index.
How does inflation change buying power?
Using the US city average CPI, $100 at average 2020 prices had the same buying power as $130.19 in September 2026. That is an overall increase of 30.19%. The comparison uses the annual average for the starting year and the monthly index for the ending date.
CPI-U, 2020 annual average and September 2026, checked November 3, 2026
This is an estimate for the overall basket, not a price for a particular shopping list. Try another amount or year in Money Value.
Can the index compare cities?
Regional and city indexes show how prices change over time within each area. They do not establish which area has higher prices. Different starting points and spending patterns make the index levels unsuitable for comparing the cost of living between cities. To compare a move, look at actual rent, transport and other expenses in each place.
How can I use inflation for a budget or wage?
Compare the same amount across dates to see how much purchasing power has changed, then check your own bills. A wage increase that is smaller than the rise in your expenses may leave less room in your budget. Wage provides occupational pay estimates; it does not replace a review of your own pay and expenses.
The September 2026 price release reports a 3.7% rise over the preceding year. The annual comparison and conversion above were checked November 3, 2026. See credits for data sources. Photo: Tessa Bury, CC BY 4.0.
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