Published in Macro-economics
June 26, 2023
Published in Macro-economics
June 26, 2023
Published in Macro-economics
June 26, 2023
What is inflation and how is it measured?
What is inflation and how is it measured?
What is inflation and how is it measured?
Before diving into any of the next articles, it is good to understand exactly what inflation is. Inflation is defined as the rising price level of goods & services in an economy.
Inflation implies that the same basket of goods and services costs more than last year.
This sounds undesirable: if you pay more for the same products, your purchasing power has decreased (assuming constant income & wealth). However, it is generally agreed amongst economists that some level of inflation is actually desirable. The Federal Reserve has a target to keep the inflation rate around 2%.
Inflation is measured by the CPI, which stands for Consumer Purchasing Index. The first national figures were published by the Bureau of Labor Statistics in 1921. As the name says, the CPI’s goal is to track the year-on-year price change of a basket of goods and services, representing an average household’s expenses.
Before diving into any of the next articles, it is good to understand exactly what inflation is. Inflation is defined as the rising price level of goods & services in an economy.
Inflation implies that the same basket of goods and services costs more than last year.
This sounds undesirable: if you pay more for the same products, your purchasing power has decreased (assuming constant income & wealth). However, it is generally agreed amongst economists that some level of inflation is actually desirable. The Federal Reserve has a target to keep the inflation rate around 2%.
Inflation is measured by the CPI, which stands for Consumer Purchasing Index. The first national figures were published by the Bureau of Labor Statistics in 1921. As the name says, the CPI’s goal is to track the year-on-year price change of a basket of goods and services, representing an average household’s expenses.
Before diving into any of the next articles, it is good to understand exactly what inflation is. Inflation is defined as the rising price level of goods & services in an economy.
Inflation implies that the same basket of goods and services costs more than last year.
This sounds undesirable: if you pay more for the same products, your purchasing power has decreased (assuming constant income & wealth). However, it is generally agreed amongst economists that some level of inflation is actually desirable. The Federal Reserve has a target to keep the inflation rate around 2%.
Inflation is measured by the CPI, which stands for Consumer Purchasing Index. The first national figures were published by the Bureau of Labor Statistics in 1921. As the name says, the CPI’s goal is to track the year-on-year price change of a basket of goods and services, representing an average household’s expenses.
