Cost of living

The amount of money needed to maintain a given standard of living in a particular place and time. It varies with prices, household needs, and the goods and services included.

Consumer price index: A statistical measure tracking changes in prices for a selected basket of consumer goods and services. It is a common way to measure how the cost of a fixed basket changes over time.
Market basket: A selected set of goods and services used to track prices or estimate expenses. A cost estimate begins by choosing which purchases the basket represents.
Cost-of-living adjustment: An increase in wages or benefits intended to offset changes in living costs. Index-linked adjustments aim to preserve the purchasing power of fixed payments.
Inflation rate: The percentage change in a price index over a specified period. A rate of price change is not the same as the amount needed to live in a place.
Housing affordability: The relationship between housing costs and the resources available to pay them. Housing often dominates household expenses and strongly shapes local affordability.
Purchasing power: The quantity of goods and services that a unit of money can buy. It shows what a given income can actually afford at local prices.
Consumer expenditure survey: A survey that collects information about household spending on goods and services. Spending data help determine which purchases receive weight in price indexes.
Minimum wage: The lowest hourly or other pay rate employers may legally provide to covered workers. Living-cost estimates inform debates about whether minimum pay meets basic needs.
Cost-of-living index versus consumer price index: A comparison of a utility-based cost index with a fixed-basket consumer price index. The distinction clarifies why commonly reported inflation measures are not exact living-cost measures.
Cost of living crisis: A period when rising essential expenses strain households’ ability to meet basic needs. It describes the acute hardship that can follow rapid increases in everyday costs.

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