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%