The consumer price index (CPI)


    What is the Consumer Price Index?

    The CPI is a way of measuring the inflation rate of an economy. It is an important factor when central banks are setting their interest rate. This is why fundamental traders often closely monitor the development of the CPI.

    It compares the prices of a basket of goods and services over time. The basket tries to resemble the structure of items that are usually bought and used by consumers.

    The CPI does not include any investments and is only focused on general consumer purchases. The contents of the “basket” may change from time to time to reflect current trends in consumer purchasing.

    The CPI is usually calculated monthly or quarterly as a weighted average for different components of consumer expenditure, such as food, housing, clothing, electricity, water, electronic devices, etc., each of which in turn has its own weighted average.