What is a Consumer Price Index and why is it important?

What is a Consumer Price Index and why is it important?

A Consumer Price Index (CPI) records the price of a wide range of goods and services in a country to keep track of inflation.

It can include anything from a loaf of bread to a holiday.

In the United States, the prices of about 80,000 items a month are collected.

Consumer prices are soaring at double-digit levels in about a fifth of OECD countries.



Have you been buying a lot of meat-free sausages and antibacterial surface wipes lately?

Well, people in the United Kingdom obviously have, because these products have recently been added to the basket of goods used to calculate the UK’s Consumer Price Index (CPI).

Other additions include pet collars and sessions at climbing walls.

So what are Consumer Price Indices and why do they matter?

What is a Consumer Price Index?

A country’s CPI tracks the prices of everyday goods and services that households buy. This covers areas including food, clothing, transport and leisure spending.

By averaging out price changes across a basket of these goods, economists can work out how prices are rising or falling and how this affects the cost of living.

Small items like a loaf of bread or a bus ticket might be part of this