Answer to Question #251565 in Macroeconomics for Mubashir

Question

Difference between Consumer price index and Sensitive price index

Answer 1

Consumer Price Index (CPI) is applied in the calculation of the cost of living adjustments by making adjustments on revenue and expense sources. The CPI is calculated by taking changes in price for each item in the predetermined basket of goods and then averaging them.

On the other hand, Sensitive Price Index refers to a weekly inflationary indicator that measures the change in the cost of a fixed basket of goods and services bought by households in the country.