CPI is an abbreviation for consumer price index, which is an average of several consumer goods and services used to calculate inflation.

CPI movements are typically expressed as percentages, with positive movements indicating inflation and negative movements indicating deflation. Inflation control is a major responsibility of central banks such as the Federal Reserve and the Bank of England. They will do so through monetary policy adjustments such as changing the base interest rate.

More than one consumer price index is frequently used to judge inflation in a given economy, with different goods and services being measured to evaluate different segments of the population.

Central banks make CPI announcements on a regular basis.

The Consumer Price Index (CPI) is a key economic measure that shows how the average prices of commonly used goods and services change over time. It tracks a “basket” of items that households regularly purchase, including food, rent, clothing, transport, medical care, and other essential expenses. Because it reflects everyday spending, CPI is often used as a main indicator of inflation.

CPI is calculated by comparing the cost of this fixed basket in the current period with its cost in a chosen base year. The difference between these values indicates whether prices have increased or decreased. When CPI rises, it signals inflation, meaning consumers need more money to buy the same goods and services. When it falls, it indicates lower price levels. Governments, central banks, and economists use CPI data to guide economic policies, adjust interest rates, and evaluate changes in purchasing power and overall cost of living in the economy.