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Consumer price index / CPI
Definition
The consumer price index (CPI) is the instrument to measure inflation. It is used to estimate the average variation between two given periods in the prices of products consumed by households. It is a composite measurement of trends in the prices of products, at constant quality. It is published each month in the Official Journal.
The price index excluding tobacco is used to index link many private contracts, alimony, annuities and also the minimum wage (SMIC). The index used for the SMIC is that of the "urban households whose head is a worker or employee, excluding tobacco". As of the dissemination of the consumer price index for January 1999, INSEE published a new index with the 1998 base = 100 to replace the 1990 base = 100. This renewed index is the seventh generation of indices since 1914.
Note
It must be remembered that the consumer price index is not an index of the cost of living. What the consumer price index seeks to measure are the effects of price variations on the purchase cost of the products consumed by households. The cost of living index, meanwhile, seeks to measure variations in purchasing costs to maintain the standard of living of households at a specified level.
