Definition
The CPI tracks a basket of goods and services such as housing, food, transportation, and medical care.
Political Dictionary
CPI
The Consumer Price Index measures average changes in prices paid by urban consumers.
Why It Matters
It is widely used to measure inflation and adjust benefits, contracts, and tax provisions.
How It Works
Statisticians collect prices, weight categories by consumer spending, and compare the index over time.
History
The federal government began publishing modern consumer-price measures in the early twentieth century.
Example
A rise in the CPI may increase cost-of-living adjustments.
Common Misconceptions
- The CPI includes every product equally.
- It measures only food and fuel.
- Each household experiences exactly the reported inflation rate.
Related Terms
- Consumer Price Index
- Inflation
- Producer Price Index
- PPI
- Cost of Living
Related Topics
See Also