Consumer Price Index is the comprehensive measure to estimate how much the basket of goods and services’ price can change in relation to consumption expenses.
In order to calculate the CPI (Consumer Price Index), it can be classified and categorized into many items (e.g. urban and rural). National statistical agencies (such as the U.S. Bureau of Labor Statistics) are responsible for calculating the overall CPI. Being based on the average commodities price, the CPI is one of the essential economy statistics. It basically shows the cost of living in a country.
CPI is used to measure the inflation. Observing by how much the CPI has changed generates the amount of inflation. The CPI also demonstrates how successful and effective the government’s economic policy is.
Financially-aware people can make economic predictions according to the CPI. They can use the inflation calculator online, where you input the year and see how much the dollar is worth.
The current CPI is not threatened by inflation. Due to a high level of cheap Chinese import and the technology improvements, the prices have been down. Also, the Great Recession has lowered economic growth, which also lowered the demand and made business stop raising prices. What they do is cut costs thus employing more workforce.