How is the CPI measured?

How is the CPI measured?

The CPI (Consumer Price Index) is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy and is the average change over time in the prices paid by urban consumers for a “market basket” of consumer goods and services. It provides information about price changes in the nation’s economy charged to government, business, labor, and private citizens. It is customarily used by them as a guide to making economic decisions. In addition, the President, Congress, and the Federal Reserve Board use trends in the CPI to aid in formulating fiscal and monetary policies.