Inflation activity
The good that I chose: Bread, white, pan, per lb. (453.6 gm)
The base year (and month) that I chose: November, 2006
The most current year (and month) with collected data: November, 2016
The price of the good during the most current year and month: $1.362
Calculation of Price Change (NEW - OLD)/OLD x 100:
(1.362 – 1.143)/1.143 x 100 = 19.16010499% (Bureau of Labor Statistics, n. d.).
The CPI value of the base year used above: 195.7
The official CPI in the year 2006 for food and beverages with the base period of 1982-84= 100 was in November 2006 at 197.2 and in the November 2016 247.246. The annual average was not used since the data is not available for the December 2016, which means that the average CPI for the previous year is not being given yet by the Bureau of Labor Statistics (Bureau of Labor Statistics, n. d.).
The CPI value of the most recent year used above: 247.700. It has been calculated based on the 11 months that data on the CPI was available.
Calculation of Inflation Rate (NEW - OLD)/OLD x 100:
(247.700 – 195.7)/ 195.7 x 100 = 26.57128%
2. Given your calculations, what does this say about the change in the price of your good in comparison to the overall inflation over the same time period?
The bread would in the year 2006 cost $1.143 and in the year 2016 $1.362. The price of the good changed to 19.160% and the inflation rate was in the taken time period 26.57%. This is showing that the price of bread did not go up as the averaged goods and services calculated by the Labor of Bureau of goods and services basket. The price of bread changed to 19.160%, which means that for the same product the consumer need to give more in the year 2016 compared to the year 2006. The prices for different goods are changing at different paces. The inflation rate represents a measure of price changes for a number of different goods and services. The CPI is therefore a factor which determines the overall inflation.
3. Explain why the price change of a particular good over a specified time period can be different than the cumulative inflation rate over that time.
The Consumer Price Index – CPI is being used when calculating the actual inflation rate. The Inflation rate is calculated on an annual basis and gives the inflation in one year based on more than 200 different categories of goods and services. I have chosen only one subcategory under the category of food and beverages were also other products and goods prices are being measured. The prices of goods and services vary since some goods have risen or fallen in price during the year.
References
Bureau of Labor Statistics. Databases, Tables & Calculators by Subject. Retrieved from https://data.bls.gov/timeseries/APU0000702111?data_tool=XGtable
