GAO Glossary of Terms and Definitions (September 2005)

Consumer Price Index (CPI)

(Economics Term)

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services commonly referred to as “inflation.” Measures for two population groups are currently published, CPI-U and CPI-W. CPI- U is based on a market basket determined by expenditure patterns of all urban households, while the market basket for CPI-W is determined by expenditure patterns of only urban wage-earner and clerical-worker families. The urban wage- earner and clerical-worker population consists of clerical workers, sales workers, craft workers, operatives, service workers, and laborers. Both indexes are published monthly by the Bureau of Labor Statistics. The CPI is used to adjust for inflation, the income payments of Social Security beneficiaries, and payments made by other programs. In addition, the CPI is used to adjust certain amounts defined by the tax code, such as personal exemptions and the tax brackets.

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