Which measure is commonly used to calculate inflation?

The Consumer Price Index (CPI) is widely recognized as a key measure for calculating inflation. It tracks the average change over time in the prices paid by consumers for a basket of goods and services. By monitoring price fluctuations in this basket, the CPI allows economists and policymakers to assess the purchasing power of currency and the cost of living. An increase in the CPI is indicative of inflation, as it signifies that consumers are paying more for the same goods and services relative to a previous time period.

This makes the CPI essential for understanding overall economic conditions, informing monetary policy, and adjusting income payments such as social security. The use of the CPI as a benchmark enables more informed decisions about spending and economic strategies by both individuals and governments. Other indices mentioned in the question focus on different economic aspects, such as stock market performance, interest rates, or employment rates, but they do not serve the same purpose in measuring inflation directly.