Price Index

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					Price Index
Price index, which is the Consumer Price Index, in English called the consumer price
index (CPI).
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Consumer price index (CPI, Consumer Price Index) is prepared countries in the world
as a index that can be used to analyze the basic dynamics of the market price is the
price the Government in formulating policies and an important basis for wage policy.
Consumer Price Index (English name: consumer price index abbreviations: CPI)
refers to a measure of the selected purchase price of a basket of consumer goods index.
Calculated index, the weights of each commodity between 1982-1984 based on the
consumer goods in urban share of the cost of living determined. It reflects and
living-related products and services price index statistics out of the price changes are
usually observed as an important indicator of inflation. If a major increase in the
consumer price index shows that inflation has become a destabilizing factor in the
economy, the central bank would tighten monetary policy and fiscal policy risk,
leading to uncertain economic outlook. Therefore, excessive increase in the index are
not in the market. For example, in the last 12 months, consumer price index rose 2.3%,
it said the cost of living than the average of 12 months increased by 2.3%. When the
cost of living increase, the value of your money will be decreased. That is, a year ago
received a 100 yuan note, you can buy today is only 97.70 yuan worth of goods and
services. Generally speaking, when the CPI> 3% increase when we called
INFLATION, that is inflation; and when the CPI> 5% increase, we called him
SERIOUS INFLATION, is inflation.
Reflect the consumer price index is living-related products and services price index
statistics out of price changes, usually observed as an important indicator of inflation.
China called the consumer price index. Urban and rural consumer price index were
compiled according to urban and rural consumer price index consumer price index,
but also the whole society can prepare the consumer price index. Consumer Price
Index to track the cost of living in a certain period to calculate inflation. If the
consumer price index increase is too large, indicating that inflation has become an
economic instability, the central bank cramping monetary and fiscal policy risk,
resulting in uncertain economic outlook. Therefore, excessive increase in the index
are not in the market.
Consumer Price Index (Consumer Price Index), is a fixed basket of consumer goods
price measure, mainly reflecting the consumers pay for goods and services price
changes, is also a tool to measure the level of inflation, percentage change in the
expression . In the United States constitute the major commodity indexes is divided
into seven categories, including: food, wine and drinks housing; clothing; traffic;
medical health; entertainment; other goods and services. In addition, the consumer
price index is also mixed with some enjoyment of life costs, such as sports tickets and
fine dining dinner. In the U.S., the Consumer Price Index published monthly by the
Bureau of Labor Statistics, there are two different consumer price index. First, the
workers and staff of the Consumer Price Index, referred to as CPW. Second, the
consumer price index for urban consumers, known CPIU.
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Important indicators of consumer price index, and revealing, to be careful to grasp,
because sometimes rise in the index published, currency exchange rate to improve,
and sometimes the opposite. Because the level of the Consumer Price Index shows
that the purchasing power of consumers, the economy, the economic situation is also
reflected, if the index fell, reflecting the economic recession, it would be unfavorable
currency exchange rates. However, if the Consumer Price Index, the exchange rate is
definitely beneficial to good? Not, to look at the Consumer Price Index
"increases" is. If the average were moderate, said economic
stability up, of course, favorable currency of the country, but if the index is too large
there are adverse effects increase as the price index and purchasing power is inversely
proportional to the more expensive prices, lower purchasing power of money certainly
detrimental to the country's currency. If you consider the impact on interest
rates, then the indicator's influence on the exchange rate is more
complicated. When a country's consumer price index rises, indicating that
rising inflation in the country, that is, reduced purchasing power of money, according
to purchasing power parity theory, the country's currency should be weaker.
Conversely, when a country's consumer price index is declining, that the
country's inflation rate has dropped, that is, increased purchasing power of
money, according to purchasing power parity theory, the country's currency
should be stronger. However, due to inflation in all countries is the primary task of
rising inflation but also the opportunity to bring higher interest rates, so good but the
currency. If the inflation rate under control and falling interest rates also tend to fall, it
will benefit the region's currency was short. Policy of reducing the rate of
inflation will lead to "tequila effect", which is a common
phenomenon in Latin America.
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1. Reflect the state of inflation
The extent of inflation is the inflation rate to reflect, and it demonstrates the continued
rise in commodity prices during a given period range. Inflation generally expressed in
the consumer price index.
2. To reflect changes in purchasing power of money
Purchasing power of money is the unit of currency to buy the number of consumer
goods and services. Consumer price index, decreased purchasing power of money; the
contrary increased. Consumer price index is the reciprocal of the purchasing power
index of the currency.
3. Reflect the real wages of workers
Consumer Price Index increase means a reduction in real wages, consumer price
index implies a decline in real wages increase.
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