Choose a base period
Select a market basket of goods and services
Collect prices for each item in the basket
Determine the quantity of each item in the basket
Calculate the cost of the basket in the base period
Calculate the cost of the same basket in the current period
Divide the current period basket cost by the base period basket cost
Multiply the result by 100
Use the formula: CPI = (Current basket cost ÷ Base basket cost) × 100
Calculate inflation rate if needed: ((Current CPI – Previous CPI) ÷ Previous CPI) × 100