Calculation of the Consumer Prices Index (CPI)
Explain how the Consumer Prices Index (CPI) is calculated.
Frequently asked question
Consumer Price Index (CPI) - a measure of inflation and changes in the cost of living.
A. Definition of CPI
B. Importance of CPI
C. Purpose of constructing a representative basket of goods and services
II. Construction of the Basket
A. Selection of goods and services
B. Monitoring of prices over time
C. Weighting of goods and services
III. Calculation of CPI
A. Measurement of annual price changes
B. Multiplication of price changes by weights
C. Comparison of weighted price changes against a base year
IV. Interpretation of CPI
A. Inflation and deflation
B. Changes in the cost of living
C. Impact on the economy and consumers
V. Limitations of CPI
A. Exclusion of certain goods and services
B. Changes in consumer behavior
C. Accuracy of data collection
A. Recap of importance of CPI
B. Future considerations for improving CPI accuracy and relevance.
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