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Inflation and Consumer Price Index (CPI) definitions

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  • Inflation
    General increase in prices across an economy, not limited to individual products, indicating a broad rise in cost of living.
  • Consumer Price Index
    Statistical measure tracking the cost of a typical basket of goods purchased by households over time.
  • Basket of Goods
    Collection of products representing typical purchases, used to assess changes in overall price levels.
  • Price Level
    Average of current prices for all products in an economy, distinct from prices of individual items.
  • Inflation Rate
    Percentage change in the price level from one year to the next, calculated using CPI values.
  • Base Year
    Reference year for CPI calculations, typically assigned a value of 100 to standardize comparisons.
  • Percentage Change
    Mathematical formula expressing the difference between new and old values relative to the original, used for inflation calculations.
  • Macroeconomic Health
    Overall condition of an economy, often evaluated using indicators like inflation and unemployment.
  • Survey
    Method used by governments to determine typical household purchases for constructing the basket of goods.
  • Housing
    Largest component in the typical basket of goods, reflecting major household spending tracked in CPI.
  • Food and Beverages
    Significant category in the basket of goods, representing essential household consumption monitored in CPI.
  • Transportation
    Major spending category included in the basket of goods, influencing overall CPI calculations.
  • Medical
    Category in the basket of goods, accounting for healthcare-related expenses in CPI tracking.
  • Education
    Component of the basket of goods, representing household spending on learning and schooling in CPI.
  • Nominal GDP
    Economic measure referenced in CPI calculation discussions, representing total output at current prices.