What is CPI?

CPI is an index of consumer prices, measuring prices for a number of consumer products. It is calculated in urban areas and provides a relatively good look at how much inflation happens in the country. This type of index is widely used and similar to the cost of living. Using the basic year system, it requires the collapse of expenditure areas from a particular year and weighs each of it in the coming years. As an example if 15% of food, 10% recreation, 25% housing, 5% clothing, 15% transport, 10% medical care, 5% education and 15% of others would be used in all the coming years, whether the actual distribution is the same. For each index every year each year accepts the connected system every year. The index released by the US Labor Statistics Office includes both traditional CPIs for all urban consumers (CPI-U) and Chained CPI for all urban consumers (C-CPI-U).

CPI represents most of the American population because it measures all urban consumers and their expenditure habits. This sector includes 87% of Americans. In addition to measuring urban consumers, it also measures the subset of this group. The CPI-W measures only those consumers who have half of their household income derived from wages or administrative professions and who have been employed at least thirty-seven weeks during the previous year. This group includes 32% of Americans.

CPI market basket consists of more than 200 categories in eight general groups: food and drinks, housing, clothing, transport, medical care, recreation, education and communication and other goods and services. In addition to goods and services purchased on the consumer market, government fees such as water fees, tolls, and also include registration fees.

Every month, Bureau of Labor Statistics conducts thousands of trades, rentals, doctors and other providers of services and goods. SuspendersThey give the prices of goods and services reported by a group of samples as their highest expenses and collect this data to CPI.

While there are many different inflation methods, all with their own advantages, CPI has shown as an ideal inflation marker for consumer purposes. By using it, the government can best determine how to adjust payments to consumers to help them meet their material needs.