The consumer price index is a broad index that estimates price changes in a basket of products and services that is representative of consumer spending in an economy.
The CPI is estimated using a very exacting calculation. Numerous categories and subcategories have been created to define consumption items based on consumer types like urban or rural. National statistics organizations primarily use these indices and subindices to calculate the final overall price index. It is one of the most crucial economic indicators and is typically calculated using the weighted average of commodity prices. It provides a sense of how much things cost.
The CPI is used to determine inflation. The degree of inflation, or the rise in the prices of a typical basket of consumed products, is determined by the percentage change in this index over a given period of time.
