Here's how the CPI report gets compiled each month—and why it's so important

From groceries to used cars and airline tickets—the prices for everyday goods and services have skyrocketed in 2022. 

That has prompted policymakers to drastically recalibrate monetary policy in an attempt to thwart inflation's damage to consumers' paychecks. But how do inflation fighters know when their actions are effective?

One of the most widely cited tools at their disposal is the consumer price index, also known as the CPI. The consumer price index is the average change in the prices paid by consumers for a basket of goods and services over time.

Watch the video above to find out how the Bureau of Labor Statistics calculates the CPI, and what it means when it comes to the U.S. economy.