consumer price index

noun

Updated on: 14 May 2018

Definition of consumer price index

: an index measuring the change in the cost of typical wage-earner purchases of goods and services expressed as a percentage of the cost of these same goods and services in some base period — called also cost-of-living index

See consumer price index defined for English-language learners

Recent Examples of consumer price index from the Web

The consumer price index is also rising at a slower pace—2.4% from a year earlier in March—according to the Labor Department.

— jacob bunge, WSJ, "Company Costs Are Rising, but Getting Shoppers to Pay More Is Hard," 9 May 2018
On Thursday, Labor releases its consumer price index for April.

— paul davidson, USA TODAY, "Will inflation heat up or warm slowly? April reports highlight the week's economic news," 7 May 2018
The consumer price index is one of the U.S. government’s most important instruments.

— Bloomberg.com, "The Consumer Price Index May Be Getting Inflation Wrong," 2 May 2018
That’s three times higher than the consumer price index over that time.

— andrew maykuth, Philly.com, "Philly has a plan to replace decaying water pipes and sewers. And you will pay for it," 16 Apr. 2018
The contract allows for an annual increase based on the consumer price index, with 1.75 percent as the minimum increase amount and 3.5 percent as the maximum.

— erin hegarty, Naperville Sun, "Naperville's monthly trash pickup fee increasing by 18 cents in May," 13 Apr. 2018
The proposal would link annual rent hikes to changes in the consumer price index, which measures the prices paid by consumers for goods and services, with a limit set at 5 percent.

— david hernandez, sandiegouniontribune.com, "Initiative proposes rent control in National City," 29 Mar. 2018
The payment would also increase every two years, by either 2 percent or the percentage increase in the consumer price index -- whichever is lower.

— julia o'donoghue, NOLA.com, "Harrah's New Orleans expansion gets Louisiana House approval," 29 Mar. 2018
The consumer price index, or CPI, is a Labor Department measure that tracks the prices of goods and services bought by people living in urban areas.

— Bloomberg.com, "Why Measuring Inflation Is Such a Tricky Business: QuickTake," 1 Mar. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'consumer price index.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of consumer price index

1945

in the meaning defined above

See Words from the same year

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Financial Definition of CONSUMER PRICE INDEX

consumer price index

noun

What It Is

The consumer price index (CPI) measures changes in consumer prices. The Bureau of Labor Statistics (BLS) calculates and publishes CPI data monthly. The CPI is the most recognized inflation measure in the United States.

How It Works

The consumer price index measures the change in the retail prices of approximately 80,000 specific goods and services, called the market basket. The goods and services fall into eight major categories: food and beverage, housing, apparel, transportation, medical care, recreation, education and communication, and other. The BLS updates the market basket every few years to remove obsolete items.

To get the data, BLS economic assistants call or visit approximately 23,000 stores and contact approximately 50,000 landlords or tenants in 87 urban areas every month to get prices on the items in the market basket. Commodity specialists review the information and make adjustments for changes in size or quality of the product.

The BLS then compares the cost of the market basket to the same basket in the starting year (usually 1982-1984). To do this, the BLS sets the average price of the market basket during the years 1982, 1983, and 1984 to equal 100. Then in every subsequent period, the BLS calculates price changes in relation to that number. A resulting CPI of 120, for example, means that prices are 20% higher than they were in the base period. By comparing the difference in CPI in consecutive months or years, we can calculate the percentage increase in prices, giving us the inflation rate.

Why It Matters

The CPI is perhaps the best way we have to gauge the amount of inflation in the economy. The affect of inflation directly or indirectly affects nearly every financial decision, from consumer choices to lending rates, from asset allocation to stock prices. By accurately measuring the amount of inflation, people, business, and the government are better able to make future financial decisions. For more information about the Bureau of Labor Statistics inflation measures, visit {ia_ext|www.bls.gov/cpi|http://www.bls.gov/cpi}.

Source: Investing Answers

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