Description
Use an internet search or the University Library to locate information on the Consumer Price Index (CPI). Internet sites you might find useful include the Bureau of Labor Statistics (BLS) and the Federal Reserve of St. Louis FRED web site although you are allowed to use other sources.
Develop a minimum 700-word analysis of inflation by including the following:
- Choose a product or service you currently consume/use, such as apparel or educational services, that is included in the CPI's "market basket." Find the annual CPI index numbers for your chosen good or service for the years 1995, 2005, 2010, and 2015. Enter those index numbers in an Excel® file and calculate the percent change (inflation rates) in those index numbers from 1995 to 2005, from 1995 to 2010, and from 1995 to 2015.
- Analyze the trends in overall inflation over the last five years and whether your income has kept pace with inflation. How has inflation over the last five years affected you and/or your family?
- Discuss how a business manager, such as a human resources manager, might use CPI statistics.
Cite a minimum of three scholarly, peer-reviewed references.
Format your paper consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
Explanation & Answer
Attached.
Running head: CPI MARKET
1
CPI Market
Name
Course
Institution
Date
Instructor
Running head: CPI MARKET
2
CPI Market
In essence, the Consumer Price Index (CPI) may be described as a measure of the
average change over time in the level of prices paid by the urban consumers for a specific market
basket of consumer goods and services. It is imperative to know that for much of the past two
decades, the prices for apparel has been on the decline in the United States, as the amount of
imports continued to grow and cheap clothing and shoes flooded the market. However, clothing
prices have essentially begun to go up, even though by small amounts. CPI indicates the inflation
rate, which is measure of the percentage change prices levels from one year to another. The
following data (Table 1.0) shows the CPI index for apparel for the years 1995, 2005, 2010 and
2015 and shows the inflation rate from 1995 to 2005, 1995 to 2010 and1995 to 2015 calculated
as a percentage change in CPI.
CPI MARKET: APPAREL
YEAR
CPI FOR APPAREL
Percentage Change
1995
109.9
-
2005
99.6
-9.37%
2010
99.5
-9.46%
2015
Table 1.0
104.9
-4.55%
With 1995 as the base year, the rate of deflation was lower in 2005 than in 2010 as shown
in the Table 1.0 above. Therefore, there was a greater decrease in the general price level of
apparel in between 2005 and 2010. However, the rate of deflation declined in 2015, meaning that
there was slight decrease in the general price level of apparel between 2010 and 2015, as shown
in the Table 1.0 above. In essence, my income has kept pace with the negative inflation in the
Running head: CPI MARKET
3
sense that when there was a steady decrease in the price levels apparel, my income increased
with a significant percentage just enough to provide some form of cushion from the effects of
inflation in other commodities. The decrease in the prices of apparel was due to the cheaper
imports of apparel from China. Inflation on other commodities over the five...
Review
Review
