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CPI and inflation. Some CPI questions for you - what is the CPI? How is the...

CPI and inflation. Some CPI questions for you - what is the CPI? How is the CPI used? Whose buying habits does the CPI reflect? Is the CPI a cost-of-living index? Does the CPI measure my experience with price changes? How are CPI prices collected and reviewed? How do I read or interpret an index? Is the CPI the best measure of inflation? Please provide detailed answers.

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Answer #1

Answer : CPI = Consumer Price Index

CPI is a measurement of consumer spending. CPI shows the cost of current year cost basket over the base year cost basket.

CPI is used to measure the inflation rate. The formula of inflation rate is [ (CPI 2 - CPI1) / CPI1] × 100

Where CPI 1 = previous year consumption cost and CPI 2 = Current year consumption cost for a good basket.

CPI shows the consumer buying habits.

No, CPI is not a cost of living standard index. Because CPI does not include all types of living cost and sometimes CPI collected data become wrong. Where cost of living standard means the total cost of living for a particular time period by which we can compare the living standard of people in urban and rural areas.

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