Cost of living
What a household must spend to keep a given standard of living.
2 min read · Reviewed September 2026
In plain words
Cost of living is a broader concept than CPI. It includes not just prices but also changes in quality and the ability to substitute one good for another. A true cost-of-living index would adjust for the fact that when beef gets expensive, people buy chicken instead.
Frequently asked questions
Is the cost of living the same as inflation?
No — they are related but distinct. Inflation measures average price changes across a basket. Cost of living measures what a household must spend to maintain a given standard, and can vary widely by location, household size, and lifestyle.
Further reading