The Consumer Price Index (CPI) is a widely used inflation measure that tracks changes in the price of a basket of goods and services purchased by households.
The basket includes essential goods and services, such as food, housing, healthcare, and transportation, and is updated periodically to reflect changes in consumer spending patterns.
The CPI is calculated by comparing the cost of the basket of goods and services in a given period to a base period.
The difference between the two periods represents the rate of inflation.
Another important inflation measure is the Producer Price Index (PPI). The PPI tracks changes in the price of goods and services at the producer level before they reach the consumer.
The PPI is used as an early indicator of inflationary pressures, as changes in producer prices can be passed on to consumers through higher prices for finished goods and services.
The PPI is also used to measure changes in input prices, such as raw materials and labor costs, which can have a significant impact on businesses profitability.
There are also different types of inflation measures, such as headline inflation and core inflation.