CPI
In short
The Consumer Price Index measures the average change over time in the prices paid by households for a basket of goods and services. It is the most common way to track inflation.
In plain words
It tracks how much the cost of living goes up or down. Experts look at the prices of things like food, fuel, and rent to see if money is losing its value.
A simple example
If a basket of groceries costs £50 this year and £52 next year, the CPI shows a 4% increase in prices.
Why it matters
Governments and central banks use it to make decisions about interest rates and wages. It helps people understand how much their purchasing power is changing.
Easy to mix up
Do not confuse it with the Producer Price Index (PPI), which tracks price changes from the perspective of manufacturers rather than shoppers.