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Consumer Price Index

The Consumer Price Index (CPI) is an indicator that measures the variation in the prices of a basket of goods and services in a specific place during a certain period of time.

This index is used to measure the impact of price variations on the cost of living increase. For this, it selects specific products, which resemble the consumption of the family, such as certain foodstuffs, footwear and textiles, fuels, transport, services... and keeps track of their prices for a defined and specific time, which is usually quarterly and annual

They are products that are purchased on a regular basis and that represent the main disbursement of families in their consumption. Thus, the CPI measures the changes in the prices of this closed basket of products and services. If during the analysis this index is positive we will say that the CPI has grown. That is, the cost of living has increased, since basic consumer products have suffered an increase in their prices. On the contrary, if the index is negative we will say that the CPI has decreased. That is, the cost of living has been reduced, since basic consumer products have registered a reduction in their prices.

Emphasize that the CPI is used to collect increases in prices and the cost of living, therefore, sometimes it's often confused with inflation, although it's true that the CPI, having a wide variety of products from different sectors, You can collect inflation to a large extent, that is, the price increase.

The CPI must have two fundamental features to be true:

- It must be representative and reliable, so that a representative and weighted sample of all the products and services of the main consumers is selected.
- It must be measurable and comparable in time and space, that is, that it can be similar and compared with the same measure in different time periods and also be similar to other countries.

As proof of the above, the Harmonized CPI (IPCA) emerges, which is used by choosing the same products and services in all countries for the same type of population, since the normal CPI varies depending on the consumption patterns of the different countries, and it's more difficult to compare them.


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