How Do You Use The Consumer Price Index?
The Consumer Price Index (CPI) is a tool used to measure inflation. It is calculated by tracking the cost of a basket of goods over time. The goods in the basket reflect the typical expenditures of consumers. Employers commonly use the CPI to adjust wages for inflation, but there are other uses like adjusting rents or child support. Read on to learn how to use the Consumer Price Index. Set the baseline clearly. Outline the parts of a compensation package you will adjust for inflation. For example, tie salary or hourly wages to inflation, but make the annual bonus have no link to inflation. Choose which CPI to use. One primary distinction is the CPI-U and CPI-W. The CPI-U includes all urban consumers, 87 percent of the U.S. population, while the CPI-W covers households that derive most of their income blue collar work, or 32 percent of the population. There are indexes specific to regions or cities and those that measure changes of goods in certain categories, such as rent. Agree on a r
