consumer price index

noun

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

Examples of consumer price index in a Sentence

Recent Examples on the Web

The index shows how the cost of living in an area compares with the national average cost of goods and services, based on consumer price index quotes for a wide array of items, including food, transportation, and rent. — Randy Tucker, Cincinnati.com, "Cincinnati has lowest cost of living of any major metro in U.S., government says.," 1 July 2019 The Labor Department said Wednesday that the consumer price index rose 1.8 percent during the past year. — BostonGlobe.com, "Bain Capital raises $900 million for life sciences fund," 13 June 2019 After four years, the wage would be set at $12 an hour, after which increases would be tied to the consumer price index. — USA TODAY, "Child rock climber, baby doll scare, real-life RoboCop: News from around our 50 states," 20 June 2019 Inflation watch: The latest consumer price index comes out Wednesday. — David Lazarus, latimes.com, "California Inc.: An alleged solar scam involving 'nearly no legitimate business'," 10 June 2019 In the first two weeks of the month, the consumer price index fell 0.30% from the end of April, leaving the annual inflation rate at 4.43% compared... — Anthony Harrup, WSJ, "Mexican Consumer Prices Fell in Early May," 23 May 2019 The consumer price index in Seattle rose 3.1 percent between August 2017 and August 2018, according to the Bureau of Labor Statistics. — Asia Fields, The Seattle Times, "UW labor union ratifies contract after tense negotiations," 2 Oct. 2018 During the same time, the overall consumer price index rose by 6.7 percent. — Susan Tompor, chicagotribune.com, "Spike in auto insurance premiums driven by high-tech features," 29 Jan. 2018 Note that the Fed targets the personal consumption expenditures deflator index, and not the consumer price index, as a possible defense for President Kashkari. — WSJ, "Time for Positive Interest Rates for Savers," 1 Nov. 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.

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9 Jul 2019

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The first known use of consumer price index was in 1945

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consumer price index

noun

Financial Definition of consumer price index

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

consumer price index

noun

consumer price in·dex