The annual cost-of-living index measures the prices of consumer goods and services in more than 300 U.S. cities. The index examines the cost of housing, transportation, groceries and other expenses, and the resulting number indicates whether it's more or less costly to live in certain areas.
The average index of all U.S. cities is 100. A city that has an index below 100 typically has a lower cost of living than the national average. A city that has an index above 100 generally has a more expensive cost of living. The Council for Community and Economic Research compiles the index, and several government organizations use the data.