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Consumer Price Index (CPI)
Practical Law Glossary Item 7-501-5470 (Approx. 2 pages)
Glossary
Consumer Price Index (CPI)
A series of statistics measuring the average change from month to month in the prices paid by urban consumers for a representative group of goods and services. The CPI is published by the US Bureau of Labor Statistics, an agency of the US Department of Labor. The CPI is used to:
- Measure inflation.
- Adjust other economic series (for example, retail sales and earnings) for price change and to convert these series into inflation-free dollars.
- Adjust income payments to consumers (for example, cost of living adjustments to Social Security payments).
In commercial contracts, rate or price adjustments for future payment obligations are sometimes tied to the corresponding percentage change in a specific CPI index for a set period.
The most comprehensive CPI index is the All Items Consumer Price Index for All Urban Consumers (CPI-U) for the US City Average, 1982-84 = 100. The US Bureau of Labor Statistics provides detailed information on the CPI.