inflation
what is inflation
the annual percentage increase in the general price of goods and services
what is the official measure of inflation
CPI
what does CPI stand for
consumer price index
what does the CPI use to calclate inflation
a weighted basket of goods and services
how many goods and serivces are in the basket
over 600
what does the term weighting mean
it holds signifigance in the calculation as it makes up a large portion of a typical households expenditure
what does the basket do over time
change due to changes in consumer spending patterns
what was used before CPI
RPI
what did the RPI include that the CPI didnt include
housing costs, morgage repayments , council taxes
why did it swith from rpi to cpi
due to the big increases and decreases in housing prices
what is factory gate prices
the price of a good as it leaves the factory
what is core inflation
inflation that does not take into account food and fuel
why do9es core inflation take out food and fuel
they are seen as global commodities
what is deflation
the annual percentage fall in the general price of good and services
why does deflation create a probem within the economy
people and businesses would delay any spending decisions leading to a negative impact on economic growth
what is disinflation
a fall in the rate of inflation
what does an index number do
make economic data easier to handle and understand
how does an index express data
as a percentage of another number which is known as a base year
why is low inflation undesireable
causes a loss of international relations,negative impact on peoples real incomes