The FRED Blog often discusses inflation—in particular, the consumer price index reported by the US Bureau of Labor Statistics. The CPI from the BLS measures the average change over time in the prices paid by urban consumers for a representative basket of consumer goods and services.

Over the years, the BLS has improved the official CPI by updating samples and weights, expanding coverage, and enhancing how it calculates the numbers. Sometimes the BLS also produces experimental versions to explore alternative methodologies. One of these experiments is the harmonized index of consumer prices (HICP).

Our FRED graph above shows the year-over-year inflation rate measured by each of these indexes. They differ in a  few ways.

• Solid blue line: The CPI inflation rate estimates price changes for the noninstitutional urban population. It doesn’t include the rural/nonmetropolitan population in its coverage, due largely to the difficulty involved in sampling the remote and sparsely populated areas of the country.
• Dashed green line: The HICP inflation rate estimates price changes for the entire population, both urban and rural. And, unlike the CPI, it excludes cost measures of owner-occupied housing. (Learn more about how CPI measures housing inflation.)

Despite the methodological differences between the CPI and HICP, both price indexes generally yield very similar inflation rates. The most visible differences are noticeable during times of heightened inflation volatility, such as the Great Recession of 2007-2009 and the post-Covid inflation ramp-up and slow-down from 2021 to 2024.

To learn more about this topic, visit the BLS and read this Monthly Labor Review by article Walter Lane and Mary Lynn Schmidt.

How this graph was created: Search FRED for and select “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average.” Click “Edit Graph” and the “Add Line” tab, then and search for and select “Harmonized Index of Consumer Prices: All-Items HICP for United States.” Last, use the “Edit Lines” tab to change the units to “Percent Change from Year Ago” and click on “Copy to all.”

Suggested by Diego Mendez-Carbajo.