Consumer Prices Index
A consumer price index measures changes in prices for a defined set of goods and services purchased by consumers, using an appropriate weighting system. Its percentage movement over a period is one measure of consumer price inflation. Exact coverage and methods differ across countries and indices. In UK usage, CPI and CPIH are distinct: CPIH includes an owner-occupier housing-cost measure and Council Tax in addition to CPI coverage.
Worked example
A comparable CPI rises from 110 to 113.3 over a year. The annual increase is 3%, calculated as (113.3 / 110 − 1) × 100. An individual household can experience a different rate because its spending pattern differs from the index weights.
Common mistake
Do not treat the index level as an inflation percentage or assume a representative basket reproduces every household’s costs. Identify the jurisdiction and index when comparing rates.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Supporting | September 2026–June 2027 |
| FIA | FBT | Supporting | September 2026–June 2027 |