When the CPI goes below 1.0 or gradually gets smaller, corrective action should not be taken, the project is performing well. False
The Consumer Price Index (CPI) is a gauge of how prices for a market basket of consumer goods and services have changed on average over time for urban consumers.
Consumer prices rise when the CPI does, and fall when it does, indicating a general decline in consumer prices. In essence, rising CPI values correspond to more inflation, while declining CPI values correspond to lower inflation or even deflation.
The project is over budget if the CPI is less than 1. Although it appears obvious, the definition above ignores the fact that the CPI will naturally fluctuate over time and that there is a reasonable range in which to anticipate this to happen.
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