The Full form of CPI is Consumer Price Index. A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services such as transportation, food and medical care etc. purchased by households. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Mathematically, the formula used to calculate the Consumer Price Index (CPI) for a single item is cost of market basket of desired year divided by cost of market basket of base year multiply by hundred. CPI is widely used as an economic indicator and changes in the CPI are associated with the cost of living used to assess price changes. It is one of the most frequently used measures of inflation and deflation and by proxy, of the effectiveness of the government’s economic policy. Across the country, CPI represents the cost of a basket of goods and services on a monthly basis. The goods and services taken into consideration are food and beverages, Housing, Apparel, Transportation, Medical care, Recreation, Education and communication and other goods and services.