What Is Consumer Price Index?

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is used to track inflation and is widely regarded as one of the most important measures of economic activity.

The CPI market basket includes a wide variety of items, including food, housing, clothing, transportation, and medical care. The weights assigned to each item in the CPI market basket are based on expenditures by urban consumers.

The CPI is calculated by taking the price of each item in the CPI market basket and weighting it according to its importance. The resulting index is then compared to a base year, with the percentage change in the index representing the inflation rate.

The CPI is released on a monthly basis and is widely used by economists, businesses, and governments to make economic decisions.

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