Investor Glossary-cost-of-living indexInvestor Glossary-cost-of-living indexInvestor Glossary-cost-of-living indexInvestor Glossary-cost-of-living indexInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Cost-of-living Index

The HTML to link to this page
 

A cost-of-living index measures the changes of prices consumers pay for a fixed basket of goods and services over time. While the Bureau of Labor Statistics states that its monthly Consumer Price Index is not a complete cost-of-living measure, the CPI is usually considered a cost-of-living index; indeed, CPI and cost-of-living index are often used interchangeably. A general cost-of-living index like the CPI measures price changes for tens of thousands of items in housing, medical care, education, recreation, and other categories. Selecting items for a cost-of-living index poses major challenges, however, because new technologies and changing lifestyles greatly affect the consumer's shopping basket. Note that a cost-of-living index is computed for specific geographic areas; thus companies will use a cost-of-living index to compensate employees who live in high-cost regions. A cost-of-living index is also frequently used to determine wage hikes. For investors, successive increases in the cost-of-living index point to increasing inflationary pressures that will eventually cause the Federal Reserve to tighten monetary policy.



Rate this cost-of-living index definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, deferred tax, ex-dividend date, 144a, class C shares, debt service coverage, balance sheet, command economy, stock split, reverse mortgage, wholly-owned subsidiary, average price per share, 1035 exchange, Key Rate Duration, margin rate, VIX, open position, covered put, annual return, per diem, required rate of return, retained earnings, irrevocable trust, risk management, LIBOR, deferred revenue, 401a, in escrow, EBITDA, diluted share, minority interest, FICO score, current ratio, quality assurance, implied volatility, FTSE, APR, dividends payable, labor relations, option premium, cancelled check, stock market close, phantom income, ex-dividend, liquidity ratio, limit order, 1031 exchange, real GDP, Zero Cost Collar


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use