Consumer Price Index CPI

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Definition of 'Consumer Price Index CPI'

A consumer price index (CPI) is a measure estimating the average price of consumer goods and services purchased by households.

The CPI measures a price change for a constant market basket of goods and services from one period to the next within the same area. This area can be a city, region, or country.

This is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer.

It is one of several price indices calculated by most national statistical agencies. The percent change in the CPI is a measure estimating inflation. The CPI is frequently used to adjust for the effect of inflation on the real value of money. For example, wages, salaries, pensions, Treasury Inflation-Protected Securities (TIPS) and regulated or contracted prices will be increased (or decreased) according to changes in the CPI.

The CPI is one of the most closely watched national economic statistics.

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