Consumer Price Index (CPI): What Does It Mean?
The Consumer Price Index, or CPI, is a measure that tracks the average change over time in the prices paid by consumers for a basket of everyday goods and services, including food, housing, transportation, and medical care. The Bureau of Labor Statistics publishes the CPI monthly, and it serves as one of the most widely used indicators of inflation in the United States.
When the CPI rises, it signals that the cost of living is increasing, which means your money buys less than it did before. Policymakers use CPI data to help set interest rates, and many contracts, including Social Security benefits and some salary agreements, are adjusted based on CPI changes to help keep pace with rising prices. Understanding CPI can help you make sense of headlines about inflation and how they might affect your budget and savings goals.
