what is the consumer price index cpi 
the consumer price index is a measure of the weighted average of the prices of a basket of consumer goods and services such as transportation food and medical care it is calculated by taking price changes for each item in the predetermined basket of goods and averaging them changes in the cpi are used to assess price changes associated with the cost of living the cpi is one of the most frequently used measures of inflation and deflation it may be compared with the producer price index ppi which instead of considering prices paid by consumers looks at what businesses pay for inputs the bottom linethe cpi is important because it tracks the changes in the prices of a fixed basket of goods that most american consumers use regularly but it omits changes in prices of goods outside of that basket gdp is the total of all goods and services produced in the economy and the number is tracked consistently as a way to determine the health of an economy in this case inflation is relatively irrelevant and even confuses the issue the gdp price deflator separates the inflation factor from gdp so that each element can be analyzed separately 