An index measuring the cost of goods and services aimed at measuring changes in the cost of living. Although prices typically rise over time, the government and central bank likes to see stable prices moving within a predefined range as laid out in its policies. Should the consumer price index rise quickly, inflation can erode workers’ salaries. i.e. they can afford to buy less for the same amount of money. The consumer price index is intended to reflect what the average consumer regularly spends on a typical basket of goods. This helps the central bank understand whether price pressures within an economy are likely to present a problem, or are transitory in nature.