Select the base period and base-year CPI basket of goods and services
Gather prices for each item in the current period
Gather prices for each item in the base period
Compute each item’s price relatives: (current price ÷ base price) × 100
Compute the weighted sum of price relatives using item weights: Σ(weight × price relative)
Divide by the sum of weights (if weights are not already normalized): (Σ(weight × price relative) ÷ Σweights)
The result is the CPI for the current period (base period CPI = 100, by convention)
For period-to-period CPI change: CPI index change = (CPI_current − CPI_previous) ÷ CPI_previous × 100
For inflation rate between periods: use the CPI percentage change between those periods