Consumer Price Index (CPI)

Introduction to Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure that examines the average change in prices of goods and services over time. It is used to evaluate changes in the cost of living and is an important economic indicator. The formula involves dividing the current cost of a basket of goods and services by the base cost, and then multiplying by 100 to get the percentage change.

Parameter usage:

• currentCost = current cost of the basket of goods and services
• baseCost = base cost of the same basket of goods and services

Output:

• CPI = Consumer Price Index percentage

Data validation

The costs of goods and services should be greater than zero.

Summary

This formula calculates the Consumer Price Index (CPI) based on the current and base costs of a basket of goods and services, providing an important measure of inflation and cost of living changes.