Everyday Life
Inflation Rate
Updated 2026-01-31
Definition
The annual percentage change in a price index, most commonly the Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics. The Federal Reserve's long-run target is 2% annual inflation. At 3% inflation, the purchasing power of a dollar halves in 24 years; at 7%, it halves in just 10 years. Inflation-adjusted (real) values use the formula Real = Nominal × (CPI_base ÷ CPI_current). Wage growth that fails to outpace CPI produces a real-wage decline even when nominal paychecks rise.
Primary source: BLS Consumer Price Index
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