What exactly is the consumer price index?
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When people want to talk about something like the “cost of living”, it can be really confusing because it’s not clear what kind of “living” we’re talking about.
Does it include housing? If so, where?
What kind of food does it include?
How about transportation?
The CPI attempts to answer all these questions by creating a detailed and concrete list of specific amounts of specific goods and services. Then it’s just a matter of checking the prices of those goods and services and adding them up.
It turns out there are actually several CPIs that are focused on different demographics and areas. For example https://www.bls.gov/opub/ted/2012/ted_20120302.htm is the breakdown for “the elderly”.
It lets you have measures of the cost of living that tries to be as consistent and objective as possible.
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