Consumer Price Index ( CPI )

Sam · Posted: Thu Apr 08, 2004 10:55 pm Post subject: Consumer Price Index ( CPI )

Most consumers are affected by the consumer price index (CPI) because it is an indicator of the prevailing economic scenario. CPI is used as an economic developer, as a deflator of other economic series and as a means of adjusting dollar values.

It reflects the spending pattern of all residents in an urban or a metropolitan area but does not consider those staying in rural and non-metropolitan areas.

The effect of the price change on all consumers living in urban areas is measured by two indexes:

Consumer Price Index (CPI).
Chained Consumer Price Index (C-CPI).

Consumer Price Index and cost of living index are often considered to be similar. But actually they differ in several aspects. The Bureau of Labor Statistics (BLS) has used the cost of living framework in making practical decisions about the evaluation of CPI. Cost of living index is not a direct alternative to CPI. Both the indexes reflect changes in the price of goods and services that are directly availed from the marketplace. But cost of living index also includes changes in governmental factors that affect consumer well-being.

All times are GMT - 7 Hours

Page 1 of 1