A measure of the average change in prices paid by consumers for goods and services.
The Consumer Price Index (CPI) measures the average change in prices paid by consumers for a basket of goods and services—including food, housing, transportation, and healthcare. Published monthly by the Bureau of Labor Statistics, CPI is the primary way the government tracks inflation. A rising CPI indicates inflation; a declining CPI indicates deflation. CPI is crucial for the Federal Reserve in setting interest rates and for workers negotiating wages and cost-of-living adjustments. Investors watch CPI closely because inflation erodes purchasing power and affects investment returns. Understanding CPI helps you see how much your real purchasing power is declining (or increasing) and plan accordingly.