It is a macroeconomic indicator reflecting the changes in the price level of consumer goods and services purchased by ordinary families, and it is one of the main indicators to measure inflation. It is a relative number used to measure the price level of a representative group of consumer goods and services in a specific period. Generally speaking, the level of CPI directly affects the introduction and intensity of national macroeconomic regulation and control measures.

For example, whether the central bank adjusts interest rates and deposit reserve ratio. At the same time, the level of CPI also indirectly affects the changes of capital markets such as stock market, futures market, capital market and financial market. The purpose of compiling consumer price index is to understand the basic situation of national price changes. Analyze and study the impact of price changes on social economy and residents' lives.

fundamental function

To measure inflation, CPI is an important indicator to measure inflation. Inflation is a general and sustained rise in the price level, and the level of CPI can explain the severity of inflation to some extent. In national economic accounting, various price indexes are needed. Such as consumer price index, producer price index and GDP deflator. Accounting GDP, so as to eliminate the influence of price factors.

Contract indexation adjustment, for example, in wage negotiation. Because employees hope that the salary increase can be equal to or higher than CPI, they hope that the nominal salary will be automatically adjusted with the increase of CPI. The timing of adjustment is usually after inflation and lower than the actual inflation rate. Reflecting the change of currency purchasing power refers to the quantity of consumer goods and services that can be purchased by unit currency. The consumer price index rose, but the purchasing power of money declined.