CONSUMER PRICE INDEX

What is Consumer Price Index?

Consumer Price Index (CPI) is the total measurement of the everyday consumer's cost of living, based on their typical fixed "shopping basket" — such as home care, health care, groceries, and more. Its biggest and most important chunk is in housing because it has a major effect on the nation's GDP and consumer health. Whether domestic or foreign, CPI measures the overall level of prices.

According to the graph above:

At points where CPI is below zero percent, it is going through deflation, which is when prices drop due to a greater ratio of supply than demand for products. Price level tends to also fall during recessions due to less spending from consumers and investors, where there is fewer movements in the market.