Essay about The Measure And Cause Inflation

929 Words Sep 23rd, 2016 4 Pages
The Measure and Cause of Inflation
Core inflation is the price change of goods and services minus food and energy. It’s measured by two indexes; CPI, consumer price index and PCE, personal consumption expenditures. The accumulation of a consumer’s monthly spending; can signal a change in inflation. In this document, I want to show how consumer spending can cause inflation and explain how inflation is monitored and measured.
Each month the government tracks CPI, which is the consumer price index. CPI is often used to measure changes in the cost of living. The categories are food/beverages, housing, apparel, transportation, medical care, recreation, education, communication, and other goods and services. When looking at our own household budget in each of these CPI categories, it is different in a couple areas from the typical consumer and it’s because of where we are in our life and the changes in our overall household. The first problem I have with recent CPI data, shown below; is I do not agree the average household’s budget for medical is only 6.6%. In fact, our healthcare costs have doubled in the past couple of years and it’s not because we see a doctor more, in fact we are very healthy. The company I work for, the higher you are compensated, the more you pay for insurance and the cost of insurance for a family has increased 5% each year for the past 3 years. A recent report, on August 2016 data, “U.S. consumer prices rose more than expected in August as…

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