Year Item Price Rate of Inflation 03/80 Gasoline (per gallon) 1.252 03/05 Gasoline (per gallon) 2.065 2.02%03/80 Bread, white, per lb 0.502 03/05 Bread, white, per lb 1.002 2.80%
03/80 Consumer Price Index 80.10 03/05 Consumer Price Index 193.30 3.59%
Source: U.S. Department of Labor - Bureau of Labor Statistics (www.bls.gov)
What is Inflation? Inflation is an indication of
rising cost of goods and services in economy. For example, a gallon of regular unleaded gasoline was 1.252 in March of 1980. Comparatively, that same gallon was priced at 2.065 in March of 2005. Therefore, over last 25 years, cost of a gallon of gas has increased at an average annual rate of inflation of 2.02%. As another example, during same 25 year period, price of white bread increased at an annual rate of 2.80%.
The Consumer Price Index (CPI) is widely accepted as measurement of general inflation in United States. The CPI is calculated monthly by U.S. Department of Labor - Bureau of Labor Statistics. It is an index based on cost of items in more than 200 categories. They include: breakfast cereal, milk, wine, bedroom furniture, men's shirts and sweaters, jewelry, physicians' services, televisions, sports equipment, college tuition, postage, and haircuts.
Simply stated, CPI tells us average change over time in cost of goods and services. From March 1980 to March 2005, inflation of general goods and services averaged 3.59% annually.
