What is the consumer price index?
The consumer price index tracks price changes in a basket of goods and services bought by households.
Definition, calculation and mechanism
Items and weights reflect expenditure surveys, and prices are compared over time. Monthly changes differ from year-over-year inflation. Quality changes, new products and shifting consumption complicate measurement.
Interpretation, examples and limits
Individual baskets differ, so an official average need not match personal living costs. A falling inflation rate usually means slower price growth, not falling prices. Check base year and methodology before comparing index levels.
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