Consumer Price Index (CPI)

What is it? The most widely accepted indicator of inflation in the United States. The index is based on the aggregate price of a weighted ?market basket? of goods, including food, housing, apparel, transportation, and medical care. Employers often use the CPI to determine how much of a raise to give their employees. Social security payments are tied to the CPI so that recipients will not lose buying power. Investors must pay particular attention to the index. While building a nest egg, they must make sure that their investments beat the annual rate of inflation. After retirement, they need to factor the rate of inflation into their calculation of how long their nest egg will last.

Added By: Bailey

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