True.
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. When the economy is functioning properly, a moderate and stable inflation rate of about 1-2% per year is typically expected and is considered a sign of a healthy economy. This inflation rate reflects a balance where there is enough economic growth to increase prices slightly without causing excess inflation, yet not so low that deflation becomes a risk.
Central banks, like the Federal Reserve in the United States, often aim to maintain inflation around this 1-2% range to ensure economic stability and growth. An increase in the CPI within this range generally indicates a growing economy with healthy demand for goods and services. Therefore, it is true that the consumer price index (CPI) should increase by 1-2% per year when the economy is working properly.
