Consumer Price Index (CPI)
The government's main measure of inflation, tracking the average price change of a basket of consumer goods and services.
The Consumer Price Index is the most widely cited gauge of inflation. It tracks the average change over time in the prices households pay for a representative basket of goods and services — food, housing, transportation, medical care, and more. When people say inflation was '3% last year,' they're usually quoting CPI.
CPI drives real-world adjustments: Social Security's annual cost-of-living adjustment, tax bracket indexing, and many contracts are tied to it. In planning, CPI is the baseline inflation rate, though specific costs like healthcare and college have historically outrun it, which is why they often get their own higher assumptions.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.