Consumer price index.

• Author: Ainsworth, Joel
• Position: Alaska Trends

The Consumer Price Index (CPI) is a measurement that quantifies the change in prices for bundles of goods and services over time. The Bureau of Labor Statistics is responsible for collecting data from 87 urban areas across the country and monitoring changes in national and regional prices. The CPI can be used as an economic indicator to measure the rate of inflation and adjust income payments, or as a deflator to measure purchasing power of a population.

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The reference base for the CPI is currently 1982-1984=100. For example, the CPI for the first half of 2009 is 190.032. This means that what would have cost $1 in 1982, would now cost a consumer $1.90 in 2009. This index can also be used to measure the increase in the cost of living in a location. It is important to note that it is not appropriate to use the CPI as a measurement of comparing cost of living across locations. Personal consumption and variations in the proportion that make up the bundle...