Fix the “basket.”The Bureau of Labor Statistics (BLS) surveys consumers to determine what’s in the typical consumer’s “shopping basket.”
e.g. basket: {4 pizzas, 10 lattes}
2. Find the prices. The BLS collects data on the prices of all the goods in the basket.
Compute the basket’s cost.Use the prices to compute the total cost of the basket.
NB: We keep the basket the same, only prices are being allowed to change. This allows us to isolate the effects of price changes over time.