The Consumer Price Index (CPI) is a measure that tracks the changes in the price level of a basket of consumer goods and services over time. It is used as an indicator of inflation or deflation in an economy.
The CPI is calculated by selecting a representative sample of goods and services commonly purchased by households, such as food, housing, transportation, and medical care, and then measuring the price changes of these items over time.
The CPI is expressed as a percentage change from a base year, with the base year typically set to 100. A CPI value greater than 100 indicates that prices have increased relative to the base year, while a value less than 100 indicates that prices have decreased.
By tracking changes in the CPI, economists and policymakers can assess the rate of inflation or deflation and make adjustments to monetary policy or other economic measures as needed.
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