ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The consumer price index (CPI) is a means to measure the weighted average cost of consumer bags of goods and services such as food, medical care, and transportation. It is evaluated by taking a cost change of each product in the prearranged bags of goods and averaging them.

Detailed explanation-2: -A consumer price index (CPI) is usually calculated as a weighted average of the price change of the goods and services covered by the index. The weights are meant to reflect the relative importance of the goods and services as measured by their shares in the total consumption of households.

Detailed explanation-3: -The weight of each component of the basket is in proportion to how they are sold. The annual CPI is reported as a whole number, and the figure is often greater than 100 (assuming current market prices are appreciating). Then, the BLS uses the current year’s CPI and the prior year’s CPI to calculate the inflation rate.

Detailed explanation-4: -The Consumer Price Index (CPI) is a measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services.

Detailed explanation-5: -Consumer price index is referred to as that index that is used in calculating the retail inflation in the economy by tracking the changes in prices of most commonly used goods and services. In other words, the consumer price index calculates the changes in price of a common basket of goods and services.