What does the acronym 'CPI' represent, commonly referenced in payroll adjustments?

The acronym 'CPI' stands for Consumer Price Index, which is a critical economic indicator commonly referenced in payroll adjustments. The Consumer Price Index measures changes in the price level of a market basket of consumer goods and services purchased by households. It reflects the inflation rate, enabling businesses and policymakers to assess the cost of living and adjust wages accordingly to maintain employees' purchasing power. When payroll adjustments are necessary, utilizing the CPI helps ensure that employee compensation aligns with economic conditions and the inflation rate. This alignment is vital for retaining employees and ensuring fair compensation in the workforce.