Inflation and Analyses of Monetary Policies
Inflation and analyses of monetary policies
Introduction
The consumer price index presents the changes in prices of various products over time. The percentage change in the consumer price index indicates the inflation levels. Change in CPI is used in assessing the changes in prices. It indicates the changes in a country’s currency purchasing power. The US Bureau of Labor Statistics (BLS) has presented the changes in consumer price indexes used in this study. In the study, the changes in consumer price index between 1995 and 2015 are presented. The consumer price index of the apparels is presented.
Apparel consumer price index
The price index for apparels for the period 1995, 2005, 2010 and 2015 is as summarized in the table below. The percentage change is also computed.
CPI apparel change
January 1995 132.2
January 2005 120.3 -9%
January 2010 119.91 -0.32%
January 2015 126.131 5.20%
Effect on income
Between 1995 and 2005, the consumer price index of apparel declined by 9%. This is an indication that the price of clothes had declined by this percentage. Reduction in the price of goods increases their affordability something that reduces the overall level of expenditure on clothes and the cost of living. Between 2005 and 2010, the CPI further reduced by 3.2%. This indicates that the price of clothes continued declining something that pushed the overall cost of living down. It is evident that during this period, the price of apparel continued declining as the level of inflation declined. It is worth noting that inflation increases the price of goods thus pushing the purchasing power of such products down. Between 2010 and 2015, the CPI increased by 5.20%. This indicates an increase in inflation and the price of apparel. People could afford less clothing in 2015 as compared to 2010. They would thus be forced to direct more resources in purchase of clothes reducing their ability to buy other products, thus increasing
the cost of living. It equally results in reduced standard of living.
How it has affected family five years
Human resource manager use CPI
126.131
119.910
120.300
132.200
Purpose of Assignment
This assignment will introduce students to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) data and provide students with the skills to calculate inflation and interpret the Consumer Price Index (CPI). Note: The BLS is the primary source of information on inflation, but their data is re-posted in other sources, such as the St. Louis Federal Reserve FRED site, among others.
Assignment Steps
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 website.
Develop a minimum 700-word analysis of inflation. Include 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 spreadsheet 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.
Format your paper according to APA guidelines
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