CPI inflation Flashcards
infaltino being 4% means
prices rising by 4%
if inflation is 3% in y1 but 4% in y2 whwat can you tel me about prices in y2
rising faster
3 in y1 to 4 in y2 means what type of inflation
rising inflation
if infaltion rate in year 2 is 4% but 1% in year 3 , what do we have
disinflatino
as long as inflatino rate is +ve ther is always an icnrease in
prices
what is inflation
persistent increases of prices in an economy in a year
what is disinflation
when the rate of infaltion is falling
inflation rate still +Ve
what is deflation
price level is falling in econ
inflation rate is -ve
how do countries measure infaltion
costructing a consumer price index
from constucting a cpi what can coutnry calc
annual rates of inflatino
why is cpi a useful way of measuring inflation
@ the end inflaiton rates given tells us about the rise in prices of g/s consumers often buying
so inflation rate more applicable and meaning to hh
what ar ethe 4 steps for constructing the cpi
family expenditure survey is carried out e.g what bought
consumer basket of the most popular goods and services is formed with avg prices attached
prices of g/s weighted based on % of income (0-1)
weighted prices are added to give price of the basket
how do we work out inflation with cpi
base year selected with index value of 100
wrighted basket prices converted into index numbers
%change calculations done to work out annual inflation rates
basket updated yearly to reflect changing consumer tastes + weights adapt
rpi is an alterative
measure of inflaiton
how do we cal rpi
exact same as cpi
but house prices included
and uses arithmetic mean - rpi gives hihger figurre