Consumer Price Index (CPI) is a measure that tracks the average change in prices of a basket of goods and services consumed by households over time.
CPI is one of the most important indicators used to measure inflation. It reflects how the cost of living changes by tracking prices of everyday items like food, fuel, housing, and transportation.
In India, CPI data is compiled by the Ministry of Statistics and Programme Implementation and monitored by the Reserve Bank of India for policy decisions.
CPI is calculated based on a fixed basket of goods and services and their price changes over time.
👉 Formula (simplified):
CPI = (Cost of Basket in Current Year ÷ Cost in Base Year) × 100
"If CPI increases from 100 to 106, it means prices have risen by 6%, indicating inflation."