Consumer price index (CPI)
from class: Principles of Finance Definition The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is a key indicator used to assess inflation and the cost of living.
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Predict what's on your test 5 Must Know Facts For Your Next Test CPI is calculated by the Bureau of Labor Statistics (BLS) on a monthly basis. It includes various categories such as food, housing, apparel, transportation, medical care, recreation, education, and communication. CPI can be used to adjust wages, pensions, and cost-of-living adjustments (COLAs). A rising CPI indicates inflation, while a falling CPI indicates deflation. Core CPI excludes volatile food and energy prices to provide a clearer view of long-term inflation trends. Review Questions What government agency is responsible for calculating the Consumer Price Index? Which components are typically excluded from the Core CPI? How does an increase in the CPI affect purchasing power? "Consumer price index (CPI)" also found in:
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