What is Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measurement designed to track the weighted average of a basket of consumer goods and services including transportation, food, medical care, and associated costs of living in a specific area. It is determined by aggregating the average prices of a basket of items, and is generally used to identify periods of inflation or deflation and the overall efficiency of a government's economic policies. The CPI typically involves statistics that cover those who are employed, self-employed, unemployed, retired, incarcerated, impoverished, and more.