Consumer Price Index (CPI)

What Is a Consumer Price Index (CPI)?

A Consumer Price Index (CPI) is an economic indicator used to measure the average change in prices of goods and services purchased by consumers. It is calculated by comparing the cost of a basket of goods and services from one period to another, usually on a monthly or annual basis. The CPI measures changes in consumer spending patterns over time, which can be used as an indication of inflationary pressures within an economy.

The CPI is widely used by governments, businesses, and economists for various purposes such as setting wages and salaries, adjusting tax brackets, determining interest rates on loans and mortgages, assessing pension benefits adjustments due to inflationary increases in costs of living expenses etc. In addition to this it also serves as a benchmark for other price indices like producer price index (PPI), wholesale price index (WPI) etc., which are based on different baskets of commodities/services that are bought or sold at different stages along the production chain.

See also  Basket

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