What is Consumer Price Index (CPI)?
Consumer Price Index (CPI) is a measure of the average price level of a basket of consumer goods and services purchased by households. CPI measures changes in these prices over time and can be used to measure inflation or deflation in an economy. The index is compiled using data collected from retail outlets, service providers, government agencies, and other sources that provide information on the cost of living for consumers. It tracks the cost of items such as food, housing, clothing, health care, transportation services and recreation expenses among others. CPI helps economists track changes in purchasing power over time which can have significant implications for businesses and governments alike. By understanding how much more it costs to purchase a certain good or service today than it did last year (or any other period), policymakers can make informed decisions about economic policy and help ensure sustainable growth.