What is the consumer price index?

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The CPI tracks changes in the price level of consumer goods and services purchased by households.

It is a key indicator used to assess <a href="https://www.wikiwhat.page/kavramlar/inflation">inflation</a> and deflation. Central banks, governments, and businesses use the CPI to make informed decisions about economic policy. For example, it influences <a href="https://www.wikiwhat.page/kavramlar/interest%20rates">interest rates</a> adjustments by central banks.

The CPI is often used to adjust wages, salaries, and pensions to reflect changes in the cost of living, ensuring that purchasing power remains relatively stable over time. This adjustment process is known as <a href="https://www.wikiwhat.page/kavramlar/cost%20of%20living%20adjustment">Cost of Living Adjustment (COLA)</a>.

Different countries and regions may calculate the CPI using different methodologies and baskets of goods and services, reflecting local consumption patterns. The data is generally collected through surveys of retail establishments and households. The <a href="https://www.wikiwhat.page/kavramlar/base%20year">base year</a> is also an important factor, as it is used as the benchmark for comparison.