Consumer price index

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The Consumer Price Index (also known as CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.[1] The main measure of inflation in the United States is the CPI, which is compiled by the Bureau of Labor Statistics.The CPI is an example of an index number, a derived number that describes the ratio of a quantity and its value at a base period. [2] The CPI can be used an economic indicator, deflator, and adjusting the value of the dollar. CPI tells us about two population groups: urban consumers, wage earners, and clerical workers. The urban group accounts for 87% of the US population. Spending patterns of people in rural nonmetropolitan areas, families that live in famers, and individuals in the armed forces or institutions (Such as jail or rehab). CPI is a good day-to-day measure of inflation. There are 8 main groups that is covered in the CPI: food and beverage, housing, apparel, transportation, medical care, recreation, education and communication and other goods and services. [3] The CPI is similar to the gross domestic product (GDP) price index in that it measures consumer goods and services, yet GDP also takes into account capital goods, goods and services purchased by the government and goods and services that enter world trade. [4]


Consumer Price Index = Price of the most recent market basket in the particular year / Price estimate of the same basket in prior years.

  1. Month. "Consumer Price Index Frequently Asked Questions." U.S. Bureau of Labor Statistics. N.p., n.d. Web. 10 Apr. 2012. <>
  4. McConnell, Campbell R., and Stanley L. Brue. Macroeconomics: principles, problems, and policies. 17th ed. Boston: McGraw-Hill/Irwin, 2008. Print.
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