What Is The CPI? The consumer price index (CPI) is a price metric for a market basket of goods and services purchased by US households at a specific point in time. Changes to the CPI are widely used in the US and other countries as measures of price inflation. Along with population growth over time, the trends in CPI are closely watched by national governments throughout the world as critical inputs for economic policy. Positive price inflation decreases our purchasing power for a market basket of goods and services over time while negative price inflation increases that purchasing power. One of the primary charges for the Federal Open Market Committee (FOMC) is to promote price stability. Although a constant measure of CPI ensures price stability, that is rarely optimal for a properly functioning economy and financial marketplace. When prices are dropping (or expected to drop) for goods and services, consumers have an incentive to wait for a lower price in the future. On the flip si