Cpi Trading

Consumer Price Index: A Comprehensive Guide

What is the Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by consumers for a basket of goods and services. It is a widely used statistical indicator of inflation and is calculated by government statistical agencies around the world.

How is the CPI Used?

The CPI is used for a variety of purposes, including:

• Measuring inflation: The CPI is a key indicator of inflation, which is the rate at which prices are rising. A rising CPI indicates that inflation is occurring, while a falling CPI indicates that deflation is occurring.
• Adjusting wages and benefits: The CPI is often used to adjust wages and benefits for inflation. For example, if the CPI increases by 2%, then wages and benefits may be increased by 2% to keep up with the cost of living.
• Forecasting economic activity: The CPI can be used to forecast economic activity. For example, a rising CPI may indicate that economic activity is expanding, while a falling CPI may indicate that economic activity is contracting.