Cost Living Money Amount Country Consumer Price Index

The Consumer Price Index (CPI) is a measurement of how the prices of "consumer goods" (things bought by individuals and families, not by businesses) change over time. The U.S. Bureau of Labor Statistics identifies a "market basket" (a group of items that are bought and sold) of goods and services and determines how much it would cost to buy all of those goods and services each year.

The CPI is used to measure "inflation" (the decrease in the purchasing power of money over time). It is also used to indicate changes in the "real value" (how much an amount of money in the past is equivalent to today) of prices and income.

The Cost of Living Allowance (COLA) is similar to the CPI. It addresses how much the "cost of living" (the amount of money needed to purchase housing, food, clothing, transportation, etc.) is in different parts of the country. The COLA is used to "adjust" (make changes to) "salaries" (the amount of money one earned for working), usually once a year.

Many web pages help people compare the cost of living in different parts of the country. The cost-of-living "calculators" (formulas) can help people determine how much money they would need to maintain a "comparable" (similar) lifestyle in a different part of the country. For example, one calculator shows that the cost of living in Houston, Texas is 40% lower than the cost of living in Los Angeles, California. Therefore, someone living in Los Angeles "on" (with a certain amount of money) $60,000 per year could maintain the same lifestyle on $36,000 in Houston.