What is the Consumer Price Index?
The Consumer Price Index measures the weighted average of prices paid by consumers for goods and services. The goods and services examined are often referred to as a basket of goods, which means the items evaluated do not change. The CPI examines the cost of items including transportation, food, and medical care. This is often compared to the Producer Price Index which looks at prices paid by business for inputs.
Why is the Consumer Price Index important?
The Consumer Price Index is an economic indicator that is widely used to monitor inflation. Because it tracks the changes in prices paid by consumers it helps evaluate the purchasing power of the dollar. Typically, purchasing power declines when aggregate price levels increase.
What should you do?
Review the Consumer Price Index to understand changes in the cost of living and the dollar’s purchasing power. This can prepare you for inflation and to make informed economic decisions. Majestic’s CORE Report follows the Consumer Price Index; along with other indicators every week to see where the market stands.