What is the CPI?

The Consumer Price Index (CPI) is that index that collects the change in prices, month by month. Through the CPI you can assess the cost of living through items such as food, housing, transportation, health care, entertainment, clothing and other expenses. It collects the price increase of a consumer basket, also known as a "family basket" or "family basket".

Every two years the different methodological aspects that make up the CPI are reviewed and a new shopping basket is made. The CPI or Consumer Price Index is used to adjust government benefits such as Social Security, and is used by many employers to determine increases in the cost of living in wages and pensions. The increase in prices - which directly affects the purchasing power of individuals - is also known as inflation.

Interpretation of the IPC

When calculating the CPI, we can obtain two results:

  • Positive CPI: indicates that there has been an increase in prices
  • Negative CPI: indicates that there has been a drop in prices

With the CPI calculator You can know how much the CPI increased or decreased between two dates and thus know the price trends.

visit our accounting glossary for more information on all economic and accounting terms.

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