The Concept And Important Index Of Inflation Rate

　　 Inflation rate concept

In economics, the rate of inflation is: the rising speed of the average price level (inflation prevail). With balloon analogy, if its volume is price level, inflation rate is balloon inflation speed. Or the rate of inflation is the rate of decline in the purchasing power of money.

In practice, it is not directly or impossible to calculate. Inflation But indirectly through the growth rate of price index. Because consumer price is the final price that reflects the circulation of commodities through various links, it reflects the demand for money in commodity circulation most comprehensively. Therefore, the consumer price index is the price index that can fully and comprehensively reflect the inflation rate. Basically, all countries in the world use the consumer price index (China's consumer price index), that is, CPI to reflect the degree of inflation.

The inflation rate can be calculated through the growth rate of price index. The price index can be converted into consumer price index (CPI), producer price index (PPI) and GNP respectively. The first formula is often used. The formula is as follows:

CPI=a1 (P1t/P10) +a2 (P2t/P20) +... +an (Pnt/Pn0) (Note: figures and T and N are subscript, P is the price of representative consumer goods, a is the weight).

Calculation methods: 1. price index Change calculation: inflation rate (price rise rate) = = (current price level base price level) / base price level}

(the price rise rate is from low to high, based on the base price level).

Note that the inflation rate is not a price index, that is, the rate of increase in price, but the rise rate of price index.

(2) use the basic concept to deduce the calculation: inflation rate (price rise rate) = (issued currency amount - the actual amount of money needed in circulation) / the actual amount of money needed in circulation: * 100%

　　 important indicator

(1) producer price index (PPI)

Producer Price Index is a price index that measures manufacturers and farmers to sell goods to stores. It mainly reflects the price changes of production data and is used to measure the change of cost and price of various commodities at different stages of production.

(two) consumer price index (CPI)

The consumer price index (Consumer Price Index) is a measure of the price of a fixed basket of consumer goods, which mainly reflects the price changes of consumers in the payment of goods and services. It is also a tool to measure the level of inflation, with the percentage change as the form of expression.

(three) retail price index (RPI)

Retail Price Index refers to the price index of retail products paid in cash or credit cards. The US Department of Commerce conducts a monthly survey of retail commodities across the country, including furniture, electrical appliances, supermarket sales, medicine and so on, but the consumption of various services is not included. Car sales constitute the largest single factor in retail sales, accounting for about 25% of the total.

Many foreign exchange market analysts pay close attention to the change of the retail price index. With the rapid development of social economy and the increase of personal consumption, retail prices will rise. This index will continue to rise, which will bring pressure on inflation to tighten the money supply and increase interest rates to support the country's currency. Therefore, the index is better and theoretically better than the country's currency.