What is the consumer price index?
Consumer price index (CPI) is an index that monitors changes in the price of basic goods and services. Consumer price indices are calculated regionally, reflecting the fact that prices are rarely stable throughout the country. They are commonly used to measure inflation and can be used in other ways. In general, consumer prices index always increases, especially in a healthy economy.
To determine the consumer prices index, government economists are used by economists called a "market basket". The market basket is a sampling of common goods and services. This is diameter to determine whether living costs are rising or decreasing in the area. Economists can also monitor trends in the market basket. For example, they can note that food prices are rising very quickly, and they can adjust the weighing consumer price index to compensate for it. If prices seem to rise very quickly, it suggests that the economy is experiencing a period of inflation. While inflation of a low measureThe ír can be beneficial, rapid inflation can put consumers in a position where their wages do not maintain a step with the consumer price index, making life difficult.
When prices fall, it reflects the deflation. Deflation is often considered negative for the economy, especially if it persists. Sometimes, however, deflation is the result of a natural market contraction after the bubble rupture. In this case, this could indicate that the market corrected itself and the prices eventually stabilize and begin to rise again.
Consumer prices Index statistics can be found through government agencies that are responsible for monitoring economic growth. Many such agencies keep their Records online and consumers have access to very old records if they are interested in monitoring changes in the CPI over the decades. It is important to realize that fluctuations from season to season can be less indicative than changes unfoldedé for a longer period of time.
In general, wages and government benefits do not keep up with inflation, as it may take time to enact change. Spike in the consumer prices index can result in problems for citizens who receive wages and benefits that can be linked to older prices.