Maria is reviewing her monthly expenses and notices that the cost of food and transportation has increased significantly over the past year. If the Consumer Price Index (CPI) indicates a rise in prices, what should Maria consider about her purchasing power and cost of living?

Maria should first understand that the Consumer Price Index (CPI) measures how much prices for goods and services, like food and transportation, have increased over time. When the CPI rises, it means that the cost of living is going up, which can reduce her purchasing power. Purchasing power refers to how much she can buy with her money; if prices go up but her income stays the same, she can afford less than before. For example, if last year Maria could buy 10 grocery items for $50, but now those same items cost $60, she can only buy 8 items with the same amount of money. Maria should think about adjusting her budget or finding ways to save on expenses to maintain her standard of living.