The CPI, or Consumer Price Index, is a frequently used economic indicator that measures the change in prices of a basket of goods and services over time. The CPIX, or Consumer Price Index excluding mortgage costs, is a variant of the CPI that excludes mortgage costs. In this article we will explore the difference between the two indices.
The CPI is typically more widely referenced and reported than the CPIX. This is likely because the CPI includes all goods and services, while the CPIX only includes those goods and services with housing-related costs. Therefore, when making comparisons between different periods or geographies, it is important to be aware of which index is being used.
What is CPI?
CPI is the Consumer Price Index, which is a measure of the average change in prices over time that consumers pay for a basket of goods and services. The CPI is used to measure inflation and is often used as a guide for setting interest rates. The CPI is also used to adjust government benefits and private sector pensions for inflation. The CPI does not include all prices, but only those that represent the spending patterns of a typical urban consumer. CPI is often confused with the Retail Price Index (RPI), which is a measure of the prices of goods and services bought by households. The CPI is released monthly by the U.S. Bureau of Labor Statistics. CPI data are also used to compile the index of leading economic indicators, which is used to predict future economic activity. CPI data are available dating back to 1913.
What is CPIX?
CPIX is the Consumer Price Index Excluding Mortgage Costs. CPIX is a measure of inflation in South Africa and is calculated by the South African Reserve Bank. The CPIX excludes the cost of housing, which is more volatile than other prices and can therefore skew the inflation rate. The CPIX is considered to be a more accurate measure of inflation than the Consumer Price Index, which includes housing costs. CPIX is used by the South African Reserve Bank to set interest rates and by businesses to adjust prices. When CPIX rises, it means that prices are rising and consumers have less purchasing power. When CPIX falls, it means that prices are falling and consumers have more purchasing power.
Difference between CPI and CPIX
CPI and CPIX are two acronyms that are often used interchangeably, but there is an important distinction between the two. CPI stands for Consumer Price Index, which is a measure of the prices of a basket of goods and services purchased by households. CPIX, on the other hand, stands for CPI ex-mortgage interest payments, which excludes mortgage interest payments from the CPI calculation. Because CPI includes mortgage interest payments, it is often considered to be a more accurate measure of inflation. However, both CPI and CPIX are useful measures of inflationary pressure in an economy.
Conclusion
The CPI and CPIX indexes measure different things. The CPI measures the cost of living, while the CPIX measures inflation. Understanding which index your country uses can help you make more informed investment decisions.
