Frequently Asked Questions (FAQs) Question: How is the Consumer
Price Index (CPI) used? Answer: The CPI affects nearly all
Americans because of the many ways it is used. Three major uses
are: As an economic indicator: The CPI is the most widely used
measure of inflation and is sometimes viewed as an indicator of
the effectiveness of government economic policy. It provides
information about price changes in the nation's economy to
government, business, labor, and other private citizens, and is
used by them as a guide to making economic decisions. In
addition, the President, Congress, and the Federal Reserve Board
use trends in the CPI to aid in formulating fiscal and monetary
policies. As a deflator of other economic series: The CPI and
its components are used to adjust other economic series for
price changes and to translate these series into inflation-free
dollars. Examples of series adjusted by the CPI include retail
sales, hourly and weekly earnings, and components of the
national income and product accoun