What does the Consumer Price Index (CPI) measure?

The Consumer Price Index (CPI) specifically measures changes in the price level of a market basket of consumer goods and services over time. This index reflects the average change in prices that consumers pay for a variety of items such as food, clothing, housing, and transportation. By tracking these price changes, the CPI provides insight into inflation and the overall cost of living, making it a crucial economic indicator. It enables policymakers, economists, and consumers to understand how purchasing power and economic conditions are shifting.

The other options focus on different economic concepts, such as spending habits, wage variability, and interest rates, which are not directly measured by the CPI. The CPI is solely concerned with price changes, making it an essential tool in economic analysis.