The Measure And Cause Inflation Essay

1010 Words Sep 23rd, 2016 5 Pages
The Measure and Cause of Inflation
Inflation is the price change of goods and services minus food and energy. It can be 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 is used to monitor inflation and explain how inflation is measured with CPI and other factors. I also want to give input to the CPI data provide in this week’s lesson plan and how it differs from our monthly budget.
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…

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