Crypto glossary
What is CPI? Consumer prices and inflation rates
KriptoMeta Editorial Team
- Added:
The Consumer Price Index (CPI) measures price changes for a basket of goods and services purchased by consumers. Spending categories such as food, shelter and transport carry different weights. The index describes a basket, not the price of a single item.
Example
Suppose an illustrative index with the same reference base rises from 300 in January to 312 in July. The price change is 312 / 300 − 1 = 4%. An increase of 12 index points is not 12% inflation. January to July covers six months; a year-over-year comparison uses the same month of the previous year.
What the index cannot tell you
A national CPI is not a personalized cost-of-living measure. Your spending weights may differ from the average household's. Index levels from different regions also cannot be treated as directly comparable prices for identical baskets.
For a US consumer example, CPI-U all items is a common reference; it is not the right benchmark for every English-speaking reader. Match the index to the economy where purchasing power is being measured. A real interest rate also separates a nominal return from inflation, with expected and realized inflation answering different questions.
Sources
Keep exploring
