Chapter 9 discussion macroeconomics
Consumer Price Index measures used to estimate the changes in prices of basket of goods or services, which represents the consumption in a given economy over a given period of time (Mankiw, 2009). The general inflation rate for the past 12 months increased to 2.1 percent, which is also, represents the Consumer Price items index (Bureau of Labor Statistics, 2018).
The Consumer Price Index over the past 10 years has ranged between -0.1 and 3.5, which indicates a considerable shift in inflation over the same period. The items index was 3.4 percent in 2008, and this drastically reduced in 2009 to -0.1 percent. The index rose for the next 2 years from -0.1 % in 2009, to 1.2% in 2010 and reached a high of 3.5 % in 2011. The price index then decreased consistently to 1.8 % and 1.4 % in 2012 and 2013 respectively, and then slightly rose to 1.5 % in 2014. After decreasing to 0.3 % in 2015, the index increased to 1.5 % and 2.1 % in 2016 and 2017 respectively (Bureau of Labor Statistics, 2018).
The Consumer Price Index is more relevant because to public economic situations because it is based on goods and services bought by the households. It is important because it highlights the general shift in products and services prices in a systematic manner. It can show the trend in economy in ways relevant to the consumer purchase behavior. My personal inflation rate may vary from the average rate represented by Consumer Prices Index if the changes in prices of the products I consumer are different from changes in prices of other products. A rapid increase in the rate of inflation means that prices of goods and services will rise while the income level has not increased proportionately, and thus increasing the cost of living (Mankiw, 2009). The rapid rise if inflation would help me as a debtor since the price or value the debt is reduced. Presently, inflation has remained at a sustainable and constant level and this does not present a big concern for policy markers.
References
Mankiw, N. G. (2009). Principles of macroeconomics. 232
Bureau of Labor Statistics ,(2018).CPI-All Urban Consumers (Current Series). Retrieved from: https://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_12mths
