Consumer Price Index CPI 

Definition of Consumer Price Index CPI

This is the official method of calculating inflation in the UK. It is a measure of the cost of living and reflects changes in the general price level.

See also: definition of inflation

The CPI uses a basket of consumer goods to give goods a weighting. Then price surveys find out how much the prices have increased.

The CPI excludes housing costs and so tends to give a lower inflation rate than the old method of calculating inflation Retail Price Index.

The Bank of England have a target to keep inflation at CPI 2%

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