Consumer price index

Consumer Price Index (CPI) is a measure of the cost of everyday goods and services. It tells us the average change in prices of a basket of goods and services that people buy. CPI is like a report card on how prices are changing over time. You can think of it like a shopping cart that is filled with different items – food, clothes, housing, and other good or services. The CPI looks at the cost of how much all these items cost every month. Then every month it compares how much these items cost this month compared to the prices from the same month last year. This way it tells us what prices are going up (inflation) and what prices are going down (deflation).