Economics Consumer Price Index Cpi Questions
The Consumer Price Index (CPI) has a significant impact on inflation expectations. As the CPI measures the average change in prices of goods and services over time, it serves as a key indicator of inflation. When the CPI increases, it suggests that prices are rising, which can lead to higher inflation expectations among consumers, businesses, and policymakers. This can result in various economic consequences, such as increased wage demands, higher interest rates, and changes in consumer spending patterns. Therefore, the CPI plays a crucial role in shaping inflation expectations and influencing economic decision-making.