**Definition of CPI, Core CPI**

Consumer price index (or abbreviated as CPI, consumer price index) is a percentage index that reflects the relative change in consumer prices over time. Additionally, it is also commonly used to calculate inflation.

Core Consumer Price Index (CPI) measures changes in the prices of goods and services, excluding food and energy

Food and energy prices are not included in core inflation. Because these are two key products, even when prices increase, demand is still large. As a result, their prices may be too volatile or fluctuate wildly.

How to calculate CPI index:

For example, in 2019 you bought 15kg of oranges and apples for 65k. However, by 2020, orange money increased in price. It's still the same 15kg of oranges and apples, but it costs you 90k to buy them. At this time, the CPI index will increase reflecting the increase in purchasing costs. CPI index in 2020 will be: 100 x (90,000/65,000) = 138.46%

The CPI index is composed of 8 main groups including: - Food and beverages - Housing - Fashion - Transportation/travel - Health - Entertainment - Education and communication - Other needs

Role of CPI - Adjusting income criteria to receive social benefits - Adjusting income tax levels - Adjusting salaries in the private sector - Adjusting house and premises rent prices - Influencing decisions FED's interest rate hike

Meaning of CPI to the economy

When the CPI index decreases, it represents a decrease in the price of goods or services. This means that if people's average income level does not change, it will improve the quality of life and increase daily living standards.

In the opposite case, when the CPI index grows rapidly, it will partly reflect that the price of the product or service is growing in an upward trend. This has a negative impact on people's daily lives. Specifically, they need to pay more for purchasing essential items while their income level is not improving.