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Understanding the Consumer Price Index (CPI): Key Insights and Trends

Consumer Price Index (CPI) definition

The Consumer price index (CPI) is used to measure the average change in prices over time for consumer goods and services. 

The consumer price index is constructed by taking the weighted average of prices on a wide variety of goods and services. Each goods and service is assigned a specific weight based on its importance to a typical consumer’s basket of goods and services purchased.

In the US more specifically, prices are collected monthly from 4,000 housing units and 26,000 retail establishments across 87 urban areas in the United States.

MacroVar monitors two important statistics for consumer inflation. Consumer Price Index (CPI) all items index which measures all items in the economy, and Consumer price index all items ex’ Food & energy also known as core CPI which monitors only the goods and services which are not affected by external factors like global dynamics, weather etc. US CPI statistics are released monthly by the Bureau of Labor Statistics.

The consumer price index is a coincident indicator meaning that it gives us an overview of what is happening in the economy now rather than what is predicted to happen in the future.

The leading indicators for inflation monitored by MacroVar are: US ISM prices and US NMI prices for the United States and the ESI weighted prices paid index for all countries in the Eurozone & Europe.

Consumer Price Index statistical analysis

MacroVar analyzes consumer price index data, by calculating the monthly percentage changes on a month by month basis and calculating the current value versus historical statistical distribution.

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