What is the Consumer Price Index (CPI)?
Headline CPI
The Consumer Price Index, or CPI, is a measure of the average change over time in the prices paid by urban consumers for a basket of goods and services.
The CPI is a widely used measure of inflation and is often used to adjust wages, pensions, and other payments to keep pace with the cost of living.
Core CPI
The Core CPI excludes the prices of food and energy, which can be volatile and can distort the overall CPI.
CPI Calculation
The CPI is calculated by the Bureau of Labor Statistics (BLS) using data from a sample of households across the country.
The BLS collects data on the prices of over 80,000 items, including food, housing, transportation, clothing, and healthcare.
CPI Uses
- Track inflation
- Adjust wages and pensions
- Set interest rates
- Make economic forecasts
CPI Criticisms
The CPI has been criticized for overstating inflation, not accounting for changes in quality, and not being representative of all consumers.
Despite these criticisms, the CPI remains a widely used measure of inflation.
Additional Resources
- Bureau of Labor Statistics CPI
- Federal Reserve Bank of Cleveland Inflation Nowcasting
- TradingView CPI
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