Consumer Price Index Definition

The Consumer Price Index (CPI) is a measure of the average change in prices paid by urban consumers for a representative basket of goods and services. The CPI is calculated by taking the weighted average of prices for a representative basket of consumer goods and services, such as transportation, food, and medical care. The weights are derived from consumption patterns. The CPI can be used to measure inflation and is often used as a key metric in macroeconomic analysis.