Inflation is a loss of fiat currency’s purchasing power over time reflected in consumer market price changes.
A visual representation of the dollar value decrease since 1913 based on BLS’ CPI and historical prices database (Novermber, 2021). Source: https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/
The US inflation is calculated and reported by the BLS (Bureau of Labor Statistics) and used by the Federal Reserve to guide their monetary policies.
The Federal Reserve (the Fed) is the US central bank, whose board members are elected by the president and approved by the senate. BLS is a statistics unit of the Department of Labor that supports the Federal Reserve with data and depends on Congress for its budget and directives.
The most important inflation metric and what you get when you search for the current inflation level in the US is the consumer price index (CPI). The CPI measures the price change of a representative basket of goods and consumable services over time. The current 8.6% inflation (as of June 2022) is the year-on-year change in CPI, where May 2022 is compared to May 2021.
There are multiple types of CPI index and other supporting indexes that the Federal Reserve reports to help investors gauge inflation, i.e., core CPI (CPI without food and energy), chained CPI (CPI corrected for consumer buying trends), PPI (producer price index), CRB (Commodities Research Bureau) index, money supply (M1, M2, M3, M4), the Fed's balance sheet, Treasury bond yields, etc.
The CPI is used across the US to negotiate wages and calculate contracts, GDP, retirement income, social payouts, stock dividends, etc.