Consumer Price Index (CPI): What It Is and Why It Matters

What Is a Consumer Price Index (CPI)?

By Jeremy Bowman – Updated Mar 13, 2025 at 10:18 AM

Key Points

CPI tracks average price changes for goods and services, influencing economic policies.
Monthly CPI reports display short-term price trends, essential for understanding market shifts.
CPI affects Social Security adjustments and Federal interest rate decisions, impacting investments.

You've probably heard of the Consumer Price Index (CPI), even if you don't know exactly what it means. Especially in inflationary times, the Consumer Price Index is a popular talking point in the business media since it's used as a proxy for inflation and has a direct impact on the daily lives of consumers.

Keep reading to learn more about what the Consumer Price Index is and how it affects the economy and your budget.

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Businessperson is using yellow measuring tape to measure growth of black upward arrow against green background. — Image source: Getty Images

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Academic views on CPI

Related investing topics

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Investing in Consumer Staples Stocks

No matter what the state of the economy is, we always need these products.

Investing in Top Consumer Discretionary Stocks

When people have a little extra cash, they indulge in offerings from companies such as these.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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