Consumer Prices Index (CPI)
Measure of average price changes for consumer goods/services.
Formula
CPI = (Cost of basket in current year ÷ Cost of basket in base year) × 100
Real World
UK CPI hit 11.1% in October 2022, its highest in 41 years, driven by surging energy and food prices — prompting the Bank of England to raise interest rates to 3% that month.
Exam Focus
State the consequence of rising CPI for businesses (e.g. wage pressure, falling real incomes) rather than just defining it.
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