What "consumer price index" means in finance

The Consumer Price Index (CPI) is a measure of the average change in the prices of goods and services that are commonly purchased by households. It is a commonly used economic indicator that tracks inflation and reflects the cost of living for consumers. The CPI is calculated by collecting price data on a variety of goods and services from a sample of households and weighting them according to their relative importance in the average consumer's budget. It is used by policymakers, businesses, and consumers to make decisions regarding investments, wages, and prices.