What are the strengths and weaknesses of the CPI?

Answer by  sindhualex (6)

The strengths of consumer price index include easier way of calculation, easier interpretation, easier comparison over the years and reliable measure for calculating the price index for the economy. The weakness of consumer price index include its non-inclusion of substitution effect. It fails to account for the fact that in certain times, people switch towards low price products.

Answer by  pcguy (307)

The CPI is a good way to measure the state of the economy, countries usually aim at a percentage between 1 and 3. Weakness is that its very slow.

Answer by  waskasoo (471)

The CPI is the Consumer Price Index. It is a broad measure of price changes across a typical basket of consumer goods. Since it is a broad measure, it is popular and widely used. However, individual consumers may find their personal situation different than the average represented by the CPI.

Answer by  meena (400)

Helps the consumer to get the right things at the right price but at the same time the consumer price index may change from month to month which is not advisable.