The Higher Education Price Index (HEPI) is an inflation index designed specifically for use by institutions of higher education. Compiled from data reported by government agencies and industry sources, HEPI measures the average relative level in the price of a fixed market basket of goods and services purchased by colleges and universities each year through current fund educational and general expenditures, excluding research. A more accurate indicator of cost changes for colleges and universities than the Consumer Price Index (CPI), HEPI is used primarily to project future budget increases required to preserve purchasing power. With compilations dating back to 1961, HEPI offers more than 50 continuous years of higher education inflation data. It is an essential tool enabling schools to determine increases in funding necessary to maintain both real purchasing power and investment. HEPI is compiled using data items from publicly-available sources that are released at different points in the academic fiscal year, from July 1 through the following June 30. For fiscal year 2019, which ended on June 30, the HEPI calculation reveals that inflation for colleges and universities was 2.5 percent, representing a decline from FY2018's 2.9 percent and FY2017's 3.4 percent. Nevertheless, FY2019 inflation was higher than FY2015's 2.0 percent and FY2016's 1.4 percent. Costs for FY2019 rose in three of the eight components tracked by HEPI, declined in four others and remained unchanged in the final one. The chief source of the year-over-year decline in the rate of HEPI inflation was faculty salaries; this most heavily-weighted component in the index increased 2.0 percent in FY2019 versus 2.8 percent in FY2018. The other component to decline in its rate of inflation was utilities, which rose 0.9 percent in FY2019 versus 1.7 percent in FY2018. Annual increases of 0.6 percent were found in clerical costs and service employee costs. For FY2019, the greatest deviation from the five-year average was in the supplies and materials component, which rose 4.1 percent compared with its five-year average of -0.4 percent. [For the 2018 Update, see ED593409.]