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The Consumer Price Index (CPI) is a key measure used to track inflation or deflation levels based on the prices paid by urban consumers. It differs from the Producer Price Index (PPI) and Gross Domestic Product (GDP) deflator, providing essential insights for economic analysis and decision-making.
The monthly statistic that measures the pace of inflation or deflation is called the Consumer Price Index (CPI). The CPI is a widely used measure in economics that tracks the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, thus reflecting inflation or deflation levels.
It is important to distinguish the CPI from other indices like the Producer Price Index(PPI), which measures the average change over time in selling prices received by domestic producers for their output, and the Gross Domestic Product (GDP) deflator, which reflects price changes for all goods and services produced domestically.
By understanding these different indices and their applications, economists can analyze and interpret inflation rates accurately and make informed decisions regarding economic policies and trends.
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