The Consumer Price Index (CPI) is a statistically constructed metric representing the weighted aggregate price level of a fixed basket of goods and services relative to a base period in monetary economics. It serves as a fundamental indicator for measuring changes in purchasing power, derived through geometric or arithmetic mean calculations subject to specific weighting methodologies such as Laspeyres or Paasche indices. This concept operates within macroeconomic theory to quantify nominal spending adjustments while explicitly excluding the real value of money fluctuations from consumer expenditure analysis.
Video tutorial: Measuring Inflation with the Consumer Price Index in Macroeconomics