Consumer price index

A statistical measure of the average change over time in prices paid by households for a selected basket of goods and services. It is widely used to measure inflation and adjust payments for changes in purchasing power.

Market basket: A selected collection of goods and services used to represent household consumption. The index tracks price changes for this representative bundle.
Inflation: A sustained increase in the general price level of goods and services in an economy. Changes in the index provide a widely used estimate of consumer inflation.
Personal Consumption Expenditures Price Index: A price index measuring prices of goods and services consumed by households, including purchases made on their behalf. It uses broader expenditure coverage and changing weights than the standard CPI.
Indexation: The adjustment of wages, benefits, taxes, or contracts according to a price or other index. CPI-linked indexation passes measured price changes into payments and obligations.
Etienne Laspeyres: A German economist whose work established a widely used formula for comparing prices using base-period quantities. The Laspeyres formula became a foundation for fixed-basket consumer price measurement.
Expenditure weight: The relative importance assigned to an item based on its share of total spending. Weights make costly household purchases matter more to the aggregate index.
Cost-of-living adjustment: An increase in wages or benefits intended to offset changes in living costs. Contract and benefit adjustments often use CPI changes as their benchmark.
Producer price index: A measure of average price changes received by domestic producers for their output. It tracks prices at the producer level rather than prices paid by households.
Bracket creep: The movement of taxpayers into higher tax brackets as nominal income rises without equivalent real gains. Inflation measured by the CPI can motivate tax-bracket adjustments to limit this effect.
Irving Fisher: An American economist known for work on price indexes, money, and interest rates. His ideal index formula addressed limitations of fixed-basket price comparisons.

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