How To Calculate The Inflation Index

Table of contents:

How To Calculate The Inflation Index
How To Calculate The Inflation Index

Video: How To Calculate The Inflation Index

Video: How To Calculate The Inflation Index
Video: How to Calculate the Consumer Price Index (CPI) and Inflation Rate 2024, March
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Inflation is the depreciation of money. It occurs when the average income of the population remains unchanged, but prices for food and manufactured goods continue to rise. The inflation index is an economic indicator that allows one to obtain a numerical characteristic of the inflationary process.

How to calculate the inflation index
How to calculate the inflation index

Instructions

Step 1

The inflation index has the same essence as the price index, but they both differ from the producer price index, the GDP deflator index, and even the consumer price index, since they have a different composition of services, goods and goods taken into account in the calculations. It is necessary to calculate the inflation index taking into account the so-called consumer basket.

Step 2

The consumer basket is a list of goods, products and a minimum set of services that are most important from the point of view of the household. This list is not accidental - it is approved by the decree of Rosgosstat for a certain period of time. Using the price index, it is possible to track inflationary (or deflationary) processes occurring in the country during the period under study. The higher this indicator, the greater the economic burden falls on the shoulders of the population and the state itself.

Step 3

Statistics on the value of the consumer basket are published in the open press every quarter. You can define them yourself by visiting the nearest stores and registering at the beginning of the study period. At the end, you go through the same shops again and write down the new prices for the same products. Add up the initial prices - this will be the base value of the consumer basket (BCB). Add up the prices at the end of the period - this will be the present value of the consumer basket (SPCt).

Step 4

The inflation index is the ratio of the base and current cost of the consumer basket, calculate it using the formula: II = SPKb / SPKt.

Step 5

The inflation index is used in many economic calculations, it is used to determine the dynamic changes: the inflation rate, the decline in real incomes of the population, the level of decline in the quality of life. Using the indicator of the inflation index that was obtained on your own, you can then compare it with the official data that Rosgosstat publishes in its reports.

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