Using four or more sentences, explain the purpose of the consumer price index (CPI).

Answer:

The consumer price index (CPI) measures changes over time in the prices consumers pay for a representative basket of goods and services. It is used to track consumer-price inflation and changes in the cost of living. When the CPI rises, consumers generally need more money to buy the same basket of items, so the purchasing power of money has fallen. The CPI also helps governments, businesses, and workers understand price trends. It is sometimes used to adjust wages, Social Security benefits, and other payments for inflation.