Inflation and Consumer Price Indices
Inflation and Consumer Price Indices
Maryam A. Bello and Hilda N. Chukwu
Multimedia University
Contents ABSTRACT 2 INTRODUCTION 3 A literature Review 5 Methodology 6 Statement Of The Problem 6 Objectives Of The Study 10 Summary and Conclusions 10
Abstract
Consumer price index has been confused by a lot of people in recent times. CPI, which is one of the most frequently used statistics to identify periods of inflation is also sometimes viewed as an indicator of the effectiveness of government economic policy. The government, business, labor, and private citizens uses price changes information provided by the CPI in the Nation 's economy to guide them in making economic decisions. The Consumer Price Index, as implied by the name is an index, or “a number used to measure change. Investopedia (Investopedia, N.D) defines CPI as "A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care." This paper attempts to explain what inflation is, types of inflation and how it is measured by the Consumer Price Index (CPI), which is the most commonly used measure of inflation. The paper also attempts to discuss the inflation behavior in Malaysia. Keywords: Inflation, Consumer Price Index, types of inflation.
Introduction
CPI and inflation has always been thought to be same because CPI is widely used as a measure of inflation. However the current rate of inflation is not given by CPI itself. To know the increase or decrease in the prices of goods and services, the index must be used in the calculations. The Bank of Canada (2010) defined inflation as "a persistent rise over time in the average level of prices in the economy." As demand for goods and services exceeds the economy 's capacity to supply those goods and services, prices tend to go up while an excess supply of goods and services tends to put downward pressure on prices.
It 's important to understand the
Maryam A. Bello and Hilda N. Chukwu
Multimedia University
Contents ABSTRACT 2 INTRODUCTION 3 A literature Review 5 Methodology 6 Statement Of The Problem 6 Objectives Of The Study 10 Summary and Conclusions 10
Abstract
Consumer price index has been confused by a lot of people in recent times. CPI, which is one of the most frequently used statistics to identify periods of inflation is also sometimes viewed as an indicator of the effectiveness of government economic policy. The government, business, labor, and private citizens uses price changes information provided by the CPI in the Nation 's economy to guide them in making economic decisions. The Consumer Price Index, as implied by the name is an index, or “a number used to measure change. Investopedia (Investopedia, N.D) defines CPI as "A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care." This paper attempts to explain what inflation is, types of inflation and how it is measured by the Consumer Price Index (CPI), which is the most commonly used measure of inflation. The paper also attempts to discuss the inflation behavior in Malaysia. Keywords: Inflation, Consumer Price Index, types of inflation.
Introduction
CPI and inflation has always been thought to be same because CPI is widely used as a measure of inflation. However the current rate of inflation is not given by CPI itself. To know the increase or decrease in the prices of goods and services, the index must be used in the calculations. The Bank of Canada (2010) defined inflation as "a persistent rise over time in the average level of prices in the economy." As demand for goods and services exceeds the economy 's capacity to supply those goods and services, prices tend to go up while an excess supply of goods and services tends to put downward pressure on prices.
It 's important to understand the
References: Bankofcanada (2010). Inflation and Price Stability. Retrieved from http://www.bankofcanada.ca/wp-content/uploads/2010/11/inflation_price_stability.pdf Cheng, M Costantino Bresciani-Turroni, Millicent E. Sayers, (1937). The Economics of Inflation: A Study of Currency Depreciation in Post-War Germany. Daniels, J Google finance (2007) Dow Jones Industrial Average Historical Prices. Google Finance. Retrieved March 14, 2010. Lebow, David E., John M. Roberts, and David J. Stockton, (1994. )“Monetary Policy and ‘The PriceLevel’,” mimeo, Board of Governors of the Federal Reserve System, 1994. Michael wines(2006). How Bad Is Inflation in Zimbabwe? Retrieved from http://www.nytimes.com/2006/05/02/world/africa/02zimbabwe.html?pagewanted=all Shapiro, Matthew D., and David W