Final answer:
The U.S. Bureau of Labor Statistics calculates the Consumer Price Index (CPI), used as the main indicator of inflation. It reflects prices for a representative basket of goods and services. CPI is part of various measures, including PPI and GDP deflator, each serving to evaluate different aspects of economic pricing.
Step-by-step explanation:
The correct answer is the U.S. Bureau of Labor Statistics. They calculate the Consumer Price Index (CPI), which is the most commonly cited measure of inflation in the United States. The CPI is determined based on the prices of a basket of goods and services representing the purchases of the average household. To avoid biases in the CPI, the Bureau uses methods such as updating the basket periodically with the Consumer Expenditure Survey, using different item categories to monitor and reflect changes in consumer preferences and consumption habits.
It's important to differentiate among various inflation indicators. While the CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, the Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. The International Price Index measures the change in the prices of goods and services traded internationally. The Employment Cost Index measures the change in the costs of labor. Lastly, the GDP deflator measures the change in prices of all goods and services produced in the country, not just what is consumed by individuals.