CPI>3% is inflation
CPI=(value of a fixed set of goods at current prices/value of a fixed set of goods at base-period prices) x 100
If, last year, popsicles were sold for $1.00 and this year they are sold for 1.2 dollars. (1.2 ÷ 1) * 100% = 120% That is, the price index for popsicles rose 20%. The reality is to take a large number of consumer goods to arrive at the price compared to last year or last quarter.
The eight categories of goods that make up the CPI are: food, housing, tobacco, alcohol and supplies, clothing, transportation and communications, health care and personal goods, household equipment and maintenance services, and recreation, sports and cultural goods and services