In the truest sense of the term, the CPI is not a cost-of-living index. The CPI measures changes in the prices of goods and services, such as food and clothing, that are directly purchased in the marketplace; but a complete cost-of-living index would go beyond this to also take into account changes in other governmental or environmental factors that affect consumers' well-being. It is very difficult to determine the proper treatment of public goods, such as safety and education, and other broad concerns, such as health, water quality, and crime that would comprise a complete cost-of-living framework.

Another difference between the CPI and a true cost-of-living index is that the CPI does not reflect the changes in buying or consumption patterns that consumers probably would make to adjust to relative price changes. For example, if the price of pork increases compared to those of other meats, shoppers might shift their purchases away from pork to beef, poultry, or fish. The ability to substitute means that the increase in the cost to consumers of maintaining their level of well-being tends to be somewhat less than the increase in the cost of the mix of goods and services they previously purchased. The current CPI does not reflect this substitution among items as a cost-of-living index would. Rather, the current CPI measures the cost of purchasing the same market basket of items, in the same fixed proportions (or weights) month after month.

Although not perfect, the CPI is currently the best indicator available, and that is why we use it in the calculator.