THE CONSUMER PRICE INDEX (CPI-U)
Consumer Price Index is a measure of change in consumer goods and services. Producer Price Indexes (PPI) often will increase before CPI.
The government chose an arbitrary date to be the base year and set that equal to 100. Currently that date is the average of the years 1982-1984; previously the base year was 1967. Index numbers are not dollar values, but measures of the change over time relative to their base period value of 100.0.
How the CPI is calculated
The Consumer Price Index (CPI) is published as an index number that shows the change in the price of a defined market basket of goods and services over time from a base period which is defined as 100.0. An increase of 7 percent from that base period, for example, is shown as 107.0. Alternately, that relationship can also be expressed as the price of a base period “market basket” of goods and services rising from $100 to $107. Currently, the reference base for most CPI indexes is 1982- 84=100 but some indexes have other references bases. The reference base years refer to the period in which the index is set to 100.0. In addition, expenditure weights are updated every two years to keep the CPI current with changing consumer preferences.
CPI Vs Wage since 1982, FRED, Federal Reserve Economic Data