CPI (Consumer Price Index)
The CPI is the official indicator that measures how the prices of a representative basket of goods and services change over time, and it's the most common way to calculate a country's inflation.
The CPI (Consumer Price Index) is calculated by tracking the price of a basket of goods and services representative of typical household spending (food, housing, transport, leisure, etc.), weighting each category according to its actual share of average spending. The CPI's change compared to the same period a year earlier is the "inflation" figure that's usually published and discussed in the media.
The CPI is one specific way of measuring inflation, though not the only one, and its methodology (which products the basket includes, how each is weighted) varies by each country's statistical agency. That's why the CPI of two countries isn't always directly comparable, and it's worth keeping in mind when planning long-term savings or retirement goals using inflation data for your own country of residence.
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Frequently asked questions
What's the difference between CPI and inflation?
Inflation is the general concept (rising prices); the CPI is the most common official indicator used to measure it, calculated from a representative basket of goods and services.
What does the CPI basket include?
Typical household spending categories such as food, housing, transport, healthcare, or leisure, each weighted according to its actual share of average consumption. The exact composition is set by each country's statistical agency.
Is the CPI the same in every country?
No: each country calculates its own CPI with its own basket and methodology, so the official inflation level of two countries isn't always directly comparable.