CPI isConsumer** Indexis a relative number that measures the degree of change in the level of a representative set of consumer goods and services**. It is a macroeconomic indicator that reflects the changes in the level of goods and services consumed by urban and rural residents, and the CPI reporting period is monthly.
How to calculate CPI:
CPI = (Total of a basket of goods and services during the reporting period Total of equivalent goods and services during the base period) x 100
Uses of CPI:
Measuring the level of inflation: The year-on-year increase in the CPI is an important indicator of the level of inflation. Generally speaking, a CPI increase of more than 3% is inflation, and more than 5% is a more serious inflation.
Adjusting wages and prices: CPI can be used to adjust wages and prices to ensure that residents' real incomes and living standards are not affected by inflation.
Monitoring economic performance: CPI is one of the important indicators that reflect economic performance, which can be used to monitor economic growth, structural adjustment, and market supply and demand.
Classification of CPI:
According to the survey object, it can be divided into urban residents' consumption** index (CPI-u), rural residents' consumption** index (CPI-R) and urban and rural residents' consumption** index (CPI).
By use: It can be divided into household consumption** index (CPI), producer** index (PPI) and GDP deflator, etc.
Limitations of CPI:
The CPI can only reflect changes in a basket of goods and services, but not all goods and services.
There are certain limitations to how CPI is calculated, for example, CPI does not reflect the impact of mass changes on **.
Summary:
CPI is an important indicator to measure the level of inflation, and it is also an important indicator to reflect the state of the economy. The calculation method, use, classification, and limitations of CPI are important for understanding and using CPI.