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Thursday, May 30, 2024

Consumer Price Index

CPI-U stands for Consumer Price Index for All Urban Consumers. It’s like a big calculator that keeps track of how much prices change for things people usually buy. Imagine if you have a list of your favorite toys and snacks, and you check the prices every month. CPI-U does that for lots of things people buy, like food, clothes, and rent. It helps us understand if prices are going up or down over time. This information is important for businesses, government, and families because it helps them plan for the future and also helps to understand why prices change.  Wages play an important part in the change in CPI.  As an example, the recent California law mandating a $20 minimum wage for fast food workers, resulted in the increase in the cost of fast foods.

Additionally, rental agreements and leases often designate the amount of annual increase that are tied to the Consumer Price Index for the area in which you live.  The increases in rent that reflect CPI increase pay for the increase in costs such as services and wages.

For more detailed information on the CPI visit the Bureau of Labor Statistics.