Economics Consumer Price Index Cpi Questions
The CPI (Consumer Price Index) is calculated by taking the price of a basket of goods and services commonly purchased by consumers and comparing it to a base period. The base period is typically set as 100. The formula for calculating CPI is:
CPI = (Cost of basket in current period / Cost of basket in base period) x 100
The basket of goods and services includes items such as food, housing, transportation, healthcare, and education. The prices of these items are collected regularly from a sample of locations across the country. The CPI is used to measure inflation and changes in the cost of living over time.