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Consumer price index (CPI) definition
The Consumer Price Index (CPI) is one of the main ways that the UK measures inflation.
What is the consumer price index?
The consumer price index (CPI) is one of the main ways the UK measures inflation – in other words, how much the cost of living is going up. Other countries also have their own CPIs that they use to measure inflation in their own economies.
The CPI tracks the price of a typical ‘shopping basket’ of around 700 goods and services that people are buying – including things like food, energy, transport, and clothing. The composition of the ‘shopping basket’ can change depending on prevailing consumer trends.
If the overall cost of that basket rises, CPI goes up. If it falls, CPI goes down.
Who calculates the CPI?
In the UK, the Office for National Statistics (ONS) calculates CPI each month, and the government and Bank of England use it to help guide decisions on things like interest rates and benefits.
For most people, CPI gives a sense of how far their money is going – and whether everyday life is getting more expensive.
Investing glossary
It's important you know
Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.