Definition
The Consumer Price Index (CPI) is a measure that shows how the prices of everyday goods and services change over time. It is used to understand inflation, meaning how much the cost of living is increasing.
Example
When the CPI increases from 100 to 110, it means that the prices of common items like food, transport, and clothing have increased by 10% over that period.
Caution
CPI shows average price changes, but actual expenses may vary from person to person. It should be used as a general indicator of inflation, not an exact measure of individual spending.