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What is the relationship between GDP and CPI(consumer price index)? My thinking is that if the CPI increases, this means that the market basket cost has increased, therefore, the consumer spending has increased. If the consumer spending increases, then GDP increases. However, depending on the consumer preferences, CPI can either underestimate or overestimate the cost of living. So from here, I cannot draw consequences about how CPI affects GDP or vice versa. Can someone please explain this? Is my thinking correct? Can there be any additions to these?

Any help would be appreciated!

Thanks in advance!

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GDP in nominal or in real terms? –  Alecos Papadopoulos Feb 27 at 0:58
thoughts on both terms would be appreciated @AlecosPapadopoulos –  orkhan471 Feb 27 at 3:00
Are you aware about the differences between CPI and GDP-deflator? –  Alecos Papadopoulos Feb 27 at 3:04
No I dont know that. I know what GDP deflator is tho –  orkhan471 Feb 27 at 13:05

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