Consumer price index
Definition. The consumer price index is a weighted average measure of the prices of a representative basket of goods and services typically bought by households, expressed relative to a base year. It is the most common gauge of the general price level and is used to calculate the inflation rate.
Each item is weighted by its share in average household spending. The percentage change in the index between two periods gives the rate of inflation over that interval.
This term belongs to Measuring Inflation and the CPI in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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