Legal Definitions - CPI

Term: CPI

Definition: CPI stands for Consumer Price Index. It is a measure of the average change over time in the prices paid by urban consumers for a basket of goods and services.

Examples:

• If the CPI is 100 in the base year and 110 in the current year, it means that the cost of living has increased by 10%.
• The CPI includes items such as food, housing, clothing, transportation, and medical care.

The first example illustrates how the CPI is used to measure inflation. If the CPI increases, it means that prices have gone up and the cost of living has increased. The second example shows the types of items that are included in the CPI basket, which gives an idea of what the average consumer spends their money on.