Inflation is the rise in the cost of life. It determines how much you can buy goods of the same name in different periods for the same amount of money. Like any statistic, inflation is numerical. Usually, price indices are used to determine it. Depending on what goods are taken into account in the calculations, inflation can have different meanings.
Instructions
Step 1
In practice, the so-called “consumer basket” is most often used to measure inflation. Its content is enshrined in law. It includes those goods that can satisfy basic human needs - the most essential foodstuffs, non-foodstuffs - clothes, shoes, and also some services. The composition of the consumer basket is unstable and changes depending on the state of the economy. To calculate the current inflation, use the fixed list approved for this year by Rosgosstat.
Step 2
To measure inflation, find out the value of the food basket at the beginning of the period for which you want to know this value. Typically, year-to-date inflation is of interest. When calculating price indices, which are an indicator of inflation, keep in mind that if such an index is equal to 1, it means that prices have not increased since the beginning of the year. If the inflation index is greater than 1, for example, equal to 1, 2, then this means that prices have increased by 20%. If it is less than 1, this already means deflation - an increase in the purchasing power of money.
Step 3
To determine the inflation index since the beginning of the current year, take the cost of the food basket at the beginning of the year and determine its relation to the cost today. The calculation formula will look like this:
I = (Pi / Po) * 100%, where
I - inflation index, Pi is the cost of the consumer basket today, Po is the cost of the consumer basket at the beginning of the year.
Step 4
Inflation has its own terms that define its level. So, if it does not exceed 10%, it is called moderate. With this inflation, short-term transactions are concluded at nominal prices. Inflation is called galloping when it reaches 100% per year. In this case, a stable currency is used for calculations or the value of transactions is determined using the expected inflation index. If its value exceeds 100%, then it is considered hyperinflation. This is a dangerous process that can destroy the economy, production and cause the death of the banking system of the state.
