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Consumer Price Index (CPI)

definition

An economic indicator that measures the rate of inflation by tracking the cost of a fixed market basket of goods and services for urban consumers. The Consumer Price Index is reported as a total number and as the core CPI, which excludes the highly volatile food and energy prices. CPI is used as the basis for benefit adjustments in government entitlement programs, such as Social Security, and for cost of living allowances (COLAS) for private-sector organizations. Unlike the Chain Deflator, the market basket does not change with consumer spending habits. It is released by the Bureau of Labor Statistics around the middle of each month. Compare to Core PPI; Personal Consumption Expenditures (PCE); Producer Price Index (PPI).