The Cost of Living Index is a measure that compares the relative cost of living in different locations. It takes into account various expenses such as housing, food, transportation, and healthcare. By analyzing these costs, the index helps individuals and businesses understand how much money is needed to maintain a certain standard of living in different areas. This index is often used by people considering relocation or by companies determining salary adjustments for employees moving to new cities. It provides valuable insights into economic conditions and helps in making informed financial decisions based on the local economy and lifestyle.