Question

What does the consumer price index measure ?

Answer 1

it’s the average prices paid by consumers for a fixed basket of goods and services. it measures the changes in the amount of money that people would need to spend to achieve a given standard of living.

Answer 2

The CPI is defined as a statistical estimate of the value of something many years ago as compared to the current time.

Like if you purchased something in 1990 for $10, so what is the value of that thing in current time. Its the comparison of basically currency. That time, the value of $10 was very high as compared to today's time.

So, this is the difference that is measured by CPI.

This is based on inflation and this is the reason, there is a gradual change in living standard.