What is consumer price inflation?

Consumer price inflation, also known as CPI, is a measure of the rate at which the prices of goods and services purchased by households rise over time. It is calculated by tracking the change in the price of a basket of goods and services commonly purchased by consumers, such as food, housing, transportation, and medical care. CPI is a widely used economic indicator that helps policymakers and businesses understand how the cost of living is changing and make decisions accordingly. High levels of CPI can be an indicator of economic instability, as they can reduce consumers’ purchasing power and erode the value of their savings.