Definition: The Retail Price Index (RPI) is a measure of inflation that tracks the change in the cost of a fixed basket of retail goods and services over time. It includes various categories such as housing costs, food, clothing, transportation, and entertainment. RPI is used to measure the cost of living and inflationary pressures within an economy.
Understanding and analyzing the Retail Price Index is crucial for assessing inflation and its impact on the economy. Businesses, policymakers, and investors use RPI to make informed decisions regarding pricing, wage negotiations, monetary policy, and investment strategies. By monitoring changes in the RPI, stakeholders can gauge the overall economic environment, anticipate changes in consumer spending power, and implement measures to manage inflationary effects on their operations and financial planning.
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