The Consumer Price Index (CPI) is an index that tracks the price of a basket of assets to gain insights into market segments. The CPI is calculated by the US Bureau of Labor Statistics (BLS) as a weighted average of prices for a group of goods and services which represent the aggregate U.S. consumer spending.
Understanding the term
CPI is one of the most popular measures of inflation and deflation. It refers to any type of index which tracks the prices of consumer goods, services, and household products. CPI is a powerful benchmark for measuring developments in the economy of a nation.
CPI is used by governments to gain insights into their monetary policy decisions. It is necessary for calculating how much should be given to citizens with subsidized incomes. Businesses and consumers can also use the CPI to make well-informed economic decisions, as it is often a key factor in pay negotiations.
The CPI index is an inflation and deflation indicator that is followed by policymakers and financial markets. Governments and central banks use the CPI and other indices to make economic decisions such as raising or lowering interest rates.