Economy
Consumer Price Index (CPI)
Definition
A measure of the average change over time in the prices paid by consumers for a representative basket of goods and services.
Explanation
CPI is the most widely used measure of inflation. Statistical agencies survey prices of hundreds of goods and services (food, housing, transportation, healthcare) and weight them by consumption patterns. Core CPI excludes volatile food and energy prices. CPI is used to adjust wages, pensions, tax brackets, and government benefits for inflation.