Basket Of Goods

What is a 'Basket Of Goods'

A relatively fixed set of consumer products and services valued and used on an annual basis to track inflation in a specific market or country. The goods in the basket are often adjusted periodically to account for changes in consumer habits The basket of goods is used primarily to calculate the Consumer Price Index (CPI).

BREAKING DOWN 'Basket Of Goods'

When conceptualizing a basket of goods, it is best to imagine a shopping basket. The basket contains everyday products such as food, clothing, furniture and financial services. As the products in the basket increase or decrease in price, the overall value of the basket changes. The CPI compares the value of the basket each year and determines the level of inflation for that period. The contents of the basket are subject to change each year.

RELATED TERMS
  1. Market Basket

    A subset of products or securities that is designed to mimic ...
  2. Basket

    A single unit of at least 15 stocks that are used in program ...
  3. Burst Basket

    A burst basket refers to a particular type of stock transaction ...
  4. Income Basket

    Categories for which various sources of income are allocated ...
  5. Country Basket

    A selection of countries that are grouped together in order to ...
  6. Currency Basket

    A selected group of currencies in which the weighted average ...
Related Articles
  1. Trading

    The Consumer Price Index

    Find out how this economic measure can help you make key financial decisions.
  2. Markets

    What Does Price Level Mean?

    Price level is the average of all current prices for goods and services in an economy.
  3. Markets

    Purchasing Power Parity (PPP)

    Purchasing Power Parity (PPP) compares different countries' currencies through a market "basket of goods" approach. Two currencies are in PPP when a market basket of goods (taking into account ...
  4. ETFs & Mutual Funds

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  5. Markets

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.
  6. ETFs & Mutual Funds

    An Introduction To Exchange-Traded Grantor Trusts

    These funds offer a very hands-off experience for the low-involvement investor.
  7. Managing Wealth

    Three Reasons Inflation Isn’t What You Think

    Though U.S. inflation has been firming recently— the core consumer price index rose in April for a 3rd month in a row—prices likely aren’t rising as much.
  8. Markets

    Should You Worry About the U.S Inflation rate?

    Understand how inflation is measured, how U.S. inflation compares to other countries, and if investors should be concerned with rising inflation.
  9. Markets

    Explaining Personal Consumption Expenditures

    Personal consumption expenditures, or PCE, is a measure of price changes in consumer goods and services.
  10. Trading

    Understanding Statistics

    Statistics provide the means to analyze data and then summarize it into a numerical form.
RELATED FAQS
  1. How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are ... Read Answer >>
  2. How is the basket of goods selected for the Consumer Price Index?

    Read about alterations in the market basket for the consumer price index, a measure of approximate consumer price changes ... Read Answer >>
  3. How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?

    Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the ... Read Answer >>
  4. Will the consumer price index (CPI) be updated or revised in the future?

    Learn about the consumer price index (CPI) and understand how its purpose and calculation make it necessary to continually ... Read Answer >>
  5. What are some limitations of the consumer price index (CPI)?

    Explore some of the basic limitations of the widely used economic indicator, the consumer price index, or CPI, and examine ... Read Answer >>
  6. How are industrial goods different from consumer goods?

    Understand the difference between industrial goods and consumer goods, and learn the different types of industrial goods ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center