Economics Consumer Price Index Cpi Questions
The impact of the Consumer Price Index (CPI) on inflation-indexed annuities is that it determines the adjustments made to the annuity payments based on changes in the overall price level. Inflation-indexed annuities are designed to provide protection against inflation by adjusting the annuity payments to keep pace with the rising cost of living. The CPI is used as a benchmark to measure changes in the cost of goods and services, and the annuity payments are typically adjusted annually based on the percentage change in the CPI. Therefore, if the CPI increases, the annuity payments will also increase, helping to maintain the purchasing power of the annuity income over time.