What Is CPI (Consumer Price Index)? Meaning & Example
Definition
The Consumer Price Index tracks the average change in prices paid by consumers for a basket of goods and services. It is one of the most watched measures of inflation.
Related terms
Inflation is the general rise in prices across an economy over time, which reduces what each unit of money can buy. Moderate inflation is normal, while high inflation erodes savings quickly.
Purchasing PowerPurchasing power is the amount of goods and services a unit of money can buy. Inflation reduces purchasing power over time.
Central BankA central bank manages a country's money supply and sets key interest rates. Its goals often include stable prices and healthy employment.
What is CPI (Consumer Price Index)?
The Consumer Price Index tracks the average change in prices paid by consumers for a basket of goods and services. It is one of the most watched measures of inflation.
Can you give an example of CPI (Consumer Price Index)?
A CPI reading 4% higher than a year earlier suggests consumer prices rose about 4% over that year.