CPI stands for the Consumer Price Index, which is a measure of the average change in prices paid by consumers for a basket of goods and services over time. It is a widely used indicator of inflation in an economy.

The CPI is calculated by the national statistical agencies, such as the Bureau of Labor Statistics in the United States or the National Bureau of Statistics in China. The basket of goods and services included in the CPI is designed to represent the typical consumption pattern of households and is periodically updated to reflect changes in consumer behavior.

The CPI is used for several important purposes:

1. Measuring Inflation: The CPI is the primary measure of inflation in an economy. It helps policymakers, such as central banks, to monitor and manage inflation levels.

2. Adjusting Incomes: The CPI is often used to adjust various types of income, such as social security payments, pensions, and wages, to maintain purchasing power in the face of rising prices.

3. Indexing Contracts: Many contracts, such as rent agreements or loan repayments, are indexed to the CPI to ensure that the terms of the contract keep pace with inflation.

4. Economic Analysis: The CPI is a crucial data point for economic analysis and forecasting, as it provides insights into consumer spending patterns and the overall state of the economy.

It's important to note that the CPI has its limitations and may not always accurately reflect the true cost of living, as it may not fully capture changes in consumer behavior or the quality of goods and services. However, it remains a widely used and influential economic indicator.